Tax implications of Gifts

As Christmas approaches, many of us have started thinking about Christmas gifts to show our appreciation to our valued clients and employees.

Understanding the tax implication of gifts can be important as we don’t want your generosity to cause you unwanted tax consequences.

Client Gifts

Gifts to clients are always tax deductible, and not subject to FBT, but that is only if they are a genuine gift eg. a Christmas hamper, bottle of wine or a nice pen.  If you choose to take a client out for a Christmas drink instead of giving them a gift, your portion of this may be subject to FBT.

Staff Gifts

Staff gifts that are over $300 will be subject to FBT.

Staff gifts that are under $300 should be eligible for the minor benefits exemption from FBT, but if they are recreation gifts (such as theatre tickets, movie tickets or sporting event) then no income tax deduction or GST can be claimed.

For staff gifts that are under $300 and not recreation, then no FBT is payable but a full income tax deduction and GST can be claimed. A great way to show your staff how appreciative you are of their hard work whilst still getting a tax deduction for your business!

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