Giving gifts to clients (think about the tax)
Posted on 22 Nov 2023
The season of giving is on us. While the fun part is thinking about parties and presents, take a moment to remind yourself about the tax rules.
If your Christmas giving includes gifts to clients, remember that some gifts will be fully deductible while others will be only 50% deductible.
The rule of thumb with gifts is that if they consist of food or drink, you can only claim 50% of the expense as a tax deduction. If you are giving out gift baskets or hampers and some of the contents are food or drink, but not all, the food or drink items are 50% deductible, but the other gift items are 100% deductible. When you come to claim the tax deduction, you will need to apportion the expense between the 100% deductible items and the 50% deductible items. And you will need to make a GST adjustment for expenses which are 50% deductible.
Examples of gifts which are 50% deductible include:
- Bottle of wine or six pack of beer
- Meal voucher
- Basket of gourmet food
- Box of chocolates/biscuits
- Christmas ham
Examples of gifts which are 100% deductible include:
- Calendars
- Book or gift vouchers
- Tickets to a rugby game (but not corporate box entertaining)
- Movie tickets
- Presents (but not food or drink)
Contact us if you’d like to check the tax treatment of your plans for this season’s gift-giving.
