Gift giving & Tax Deduction Rules

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If you plan on giving gifts to clients, know the rules around claiming tax deductions.

The rule of thumb is: you can only claim 50% of food and/or drink gifts, but all other gift items are 100% deductible;

Note that a gift hamper containing some – but not only – food and drink, needs to have the expense apportioned between the 50% deductible and the 100% deductible items.

Examples:

50% deductibleBottle of wineMeal voucherChristmas hamBox of chocolatesValue of food & drink in a mixed hamper
100% deductibleSet of wine glassesBook voucherMovie ticketsBeach towelValue of other goods in a mixed hamper
 

Fringe Benefit Tax

If you are giving gifts to staff you may also be liable for Fringe Benefit Tax.

Gifts under $300 per employee per quarter are exempt. If the total value of benefits for all employees exceeds $22,500 for the year, the full value of the benefits will be subject to FBT.

FBT rules can be complex so we advise contacting us if you are in any doubt.

 

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