If you’re buying your staff and clients a gift this year or throwing a party, it’s helpful to understand what’s deductible, what’s not and what may attract Fringe Benefits Tax (FBT). Are Christmas gifts tax deductible? Yes. If the gift isn’t classed as entertainment, then it is tax deductible and GST can be claimed.
Is a Christmas party tax deductible?
In a nutshell: Christmas parties cannot be claimed as an income tax deduction. If you give your gift to your employee, associate or client at your Christmas party, the cost of the gift and per head cost of the party can be calculated separately to determine if they fall under $300 in value.
Can I claim for Christmas party?
The cost of providing a Christmas party is income tax deductible only to the extent that it is subject to fringe benefits tax (FBT). Therefore, any costs that are exempt from FBT (that is, exempt minor benefits and exempt property benefits) cannot be claimed as an income tax deduction.
How much can I spend on client gifts?
As a rule of thumb, look for something in the $50-$200 range. A gift in that range probably won’t cause the client to feel embarrassed, but it also won’t seem stingy.
Can I claim GST on staff Christmas party?
A Christmas party is considered ‘entertainment’ and in many cases is subject to fringe benefits tax (FBT). They can also be exempt from FBT under the minor benefit exemption if associates of the employee (e.g. friends and family) attend, as long as the cost/head of the benefit is less than $300 (inclusive of GST).
What percentage of income should go to gifts?
A good rule of thumb is to allocate approximately 1% to 5% of your income to gift-giving depending on your preferences. This applies to the total spent on gifts — not a per-person or per-child gift.
Can you claim for entertaining clients?
Client entertainment Your company can pay for entertaining clients or potential clients, but this will not be an allowable deduction for Corporation Tax purposes. It’s still worth paying from the company though, as it saves you the income tax you would otherwise pay on withdrawing the funds to pay the costs personally.
