Business Basics, Tax & Accounting

Are Gifts Sent to Clients Deductible?

Over the next few weeks we will be running a series of blogs on spending in the Christmas season. What’s deductible, what attracts Fringe Benefits Tax and how to ensure you can make informed decisions on where you spend your money. 

If you are considering giving some gifts to your clients for Christmas rest assured that in most circumstances these will be deductible to your business. 

If the gifts are given with the intention of being a gesture of goodwill in the hope of generating future income they are fully tax deductible. This would also apply to referral sources. For example, if you were an electrician and received referrals from a local real estate agent, a gift to them would qualify as tax deductible. 

This is a far more tax effective way of saying ‘thanks’ to your clients and referral sources as opposed to putting on a party. The party is unfortunately not deductible as it is considered ‘entertainment’. 

This is general information. We always recommend you seek advice for your individual situation from your advisor. 

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