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How tax deductible are gifts to clients?

21 October 2024

The season of giving is nearly upon us. If you're thinking about giving a gift to your clients, here's a reminder of the tax rules when giving these gifts.

When giving gifts to clients, remember that depending on the gift, some will be fully tax deductible while others will be only 50% deductible. The rule of thumb 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)

If you’re unsure whether a planned gift is 50% or 100% tax deductible, gives us a call and we can advise you.

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