Are you one of those generous employers who give Prezzy cards to your team? There may be a hidden cost…

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Prezzy cards, and similar ‘open’ cards that can be spent anywhere, are treated by the IRD as cash bonuses. That means if you give a staff member a Prezzy card, you need to:

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• Include it in your PAYE payroll returns, and

• Deduct and pay PAYE tax on it – just like you would for wages or a cash bonus.

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Why This Matters

Even though it feels like a gift, IRD sees it as income for the employee. So if it's not included in your payroll, you could be at risk of getting things wrong with your tax obligations.

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Other Options

Try giving out store-specific, or ‘closed’ cards instead, such as Mitre 10, New World or a Plaza card.

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Avoid cards for businesses that provide food or drink, such as Restaurants or Bottle Stores. These are treated as entertainment, so are only 50% deductible to you.

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You can provide up to $300 of unclassified benefits per employee per quarter without becoming subject to fringe benefit tax.  That includes the ‘closed’ cards – so be wary of the amount and timing of your gifts.

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If you do decide to give Prezzy cards or similar rewards, let us know. We can help update your payroll or show you what to do next.

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Got questions? Just get in touch — we’re happy to help.

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