Are gifts tax deductible?

If you give a gift to a client and expect the gift will either generate future business from them or make them more inclined to refer others to your business, it’s deductible. This includes alcohol as well.

However, if the gift was made for personal reasons or is private or of a domestic character, it’s less likely to be deductible. This includes clients who are also family members.

If you are gifting an employee, then you need to keep the cost of the gift below $300 per person. The gifts also need to be ad-hoc, so splitting a $1,000 gift voucher into 10 x $100 vouchers and giving them to an employee at the end of each month won’t be acceptable to the ATO.

If the gift is ad-hoc and below $300, the Tax Office considers it to be a minor benefit and as such, exempt from Fringe Benefit Tax (FBT). Gifts above this level are deductible to the business, but FBT will apply.

Call in at your local TaxAssist Accountants for help and advice on any of the above.

Date published 7 May 2021 | Last updated 8 May 2021

This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.