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Client gift expenses and tax deductibility

by | Jul 13, 2021 | News

If you provide a gift to a client, depending on the type of gift, you may be able to claim a tax deduction. It may be completely deductible or only 50% deductible.
If the gift is in the nature of ‘entertainment’, such as food and wine, it will be 50% deductible.

If gifts consist of food or drink, you can only claim 50% of the expense as a tax deduction.

If gift baskets or hampers contain food or drink as well as other treats, the food or drink items are 50% deductible, but the other gift items are 100% deductible.

Keep these examples handy to help determine whether gifts to clients are completely deductible or only 50% deductible:

Client Gift50% deductible100% deductible
Bottle of wine or six pack of beerYes
Meal voucherYes
Basket of gourmet foodYes
Box of chocolates/biscuitsYes
Christmas hamYes
CalendarYes
Book or gift voucherYes
Tickets to a rugby game
(but not corporate box entertaining)
Yes
Movie ticketsYes
Presents (not food or drink)Yes

When you claim tax deductions for client gifts, you need to apportion the expense between the 100% deductible items and the 50% deductible items. We can help with this.

Please contact us should you wish to discuss any of the above in more detail.

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