GST and Gifts to Clients

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.

 

If your Christmas giving includes gifts to clients, remember that some gifts will be fully deductible while others will be only 50% deductible. Use these examples as a guide.

50% deductible

  • Bottle of wine or six pack of beer
  • Meal Voucher
  • Basket of gourmet food
  • Box of chocolates/biscuits
  • Christmas ham

 

100% deductible

  • Calendar
  • Book or gift voucher
  • Tickets to a rugby game (but not corporate box entertaining)
  • Movie tickets
  • Presents (not food or drink)