The season of giving is on us. While the fun part is thinking about parties and presents, take a moment to remind yourself about the tax rules. If your Christmas giving includes gifts to clients, remember that some gifts will be fully deductible, while others will be only 50% deductible.

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. And you will need to make a GST adjustment for expenses which are 50% deductible.

Examples of gifts which are 50% deductible include:

·        Bottle of wine or six pack of beer.

·        Meal voucher.

·        Basket of gourmet food.

·        Box of chocolates/biscuits.

·        Christmas ham.

Examples of gifts which are 100% deductible include:

·        Calendars.

·        Book or gift vouchers.

·        Tickets to a rugby game (but not corporate box entertaining).

·        Movie tickets.

·        Presents (but not food or drink).



Call us if you’d like to check the tax treatment of your plans for this season’s gift-giving.