Can I make a gift to my employees and clients?

As long as you don’t provide any single employee with a gift worth more than $300 each quarter (March, June, September, and December), the costs are 100% deductible. However…if the gift is food and/or drink, then only 50% can be claimed.

If you’re gifting vouchers, GST cannot be claimed on the purchase price. The 50% rule applies here too – if the vouchers relate to food/drink, you can only deduct 50% of the cost.

If you’re providing a staff shout, only 50% of the expenses can be claimed beause food and drinks are being provided.

For gifts to clients and suppliers, the rules are exactly the same as above, except there is no set dollar value.

 This sounds really complicated!

You don’t need to make any adjustments at your end for GST or splitting out non-deductible entertainment – your accountant will do that when the financial statements are prepared.

 Why the limit of $300?

This is set by the IRD. Anything more than $300 (excluding GST) per quarter is captured by the FBT regime (Fringe Benefit Tax). You really don’t want to go there…

Covid reminder

There’s still uncertainty around restrictions under the current Level-Step system and the incoming Traffic Light system. If you’re booking a restaurant or a venue, we suggest you make sure they can accommodate appropriate seating for your team.

It wouldn’t be a bad idea to check out their cancellation policy either – you’ll probably need to put down a deposit, but is it refundable?

Related articles

Expenses, Tax
Fancy a cuppa and a bite to eat?
Read more
Expenses, Xero
Spent money from a personal bank account?
Read more
How to correctly claim your home office expenses
Read more