Important Christmas Tax Tips

Managing Senior Accountant - Chesterton Accounting

Monthly tax tip:

It’s that time of year again to talk about the tax implications of Christmas gifts given to employees and clients/customers. If you are hoping to provide gifts to your staff this year then the best tax outcome is to give non-entertainment based gifts that cost less than $300 per employee as the full cost will be tax deductible with GST credits able to be claimed and no fringe benefits tax liability. Entertainment based gifts are generally not tax deductible and no GST credits can be claimed. Similar rules apply for gifts given to clients, contractors or suppliers. Please see examples below.

Non-entertainment-based gifts – hampers, wine, gift vouchers, flowers, jewellery, etc.
Claim tax deduction/GST credits? Yes, for both employees and clients
Fringe benefits tax liability? Only if spending more than $300 per employee

Entertainment-based gifts – movie tickets, tickets to sporting event, travel costs for a holiday/vacation
Claim tax deduction/GST credits? Clients – no. Employees – no tax deduction unless FBT applies (FBT applies once the gift is over $300 per employee)
Fringe benefits tax liability? Only if spending more than $300 per employee

Managing Senior Accountant - Chesterton Accounting