As business owners, we like to show our appreciation to clients that have shown us loyalty particularly during these disruptive COVID times.
Christmas is the perfect time to acknowledge and demonstrate our gratitude.
Better still, even though this is a ‘gift’, your business is entitled to a tax deduction where the ‘gift’ is made to a former or current client, as long as it has been made for the purpose of generating future business revenue.
Where the gift is provided to a relative, family member or friend it is not tax-deductible as the gift would be deemed to be made for personal, as opposed to business reasons.
Note also, where the gift is deemed to be the ‘provision of entertainment’ it will not be seen to be a tax-deductible gift, as entertainment falls outside the general tax-deductibility section of the Income Tax Assessment Act 1997. This is particularly the case with expenditure connected with client Christmas parties, paying for a meal for a client at a restaurant, theatre or cinema tickets, travel and accommodation, just to name a few.
Business Owners – Are you considering providing Christmas gifts to your staff?
Should you require any further information in relation to the tax implication of gifting to clients please feel free to contact Peter Quinn by submitting an enquiry or calling us on +61 2 9580 9166 to book an obligation free appointment.
The information in this document does not take into account your personal objectives, financial situation or needs and so you should consider its appropriateness having regard to these factors before acting on it. It is important that your personal circumstances are taken into account before making any financial decision and it is recommended that you seek assistance from your financial adviser.