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Client Gift Giving: Are Christmas Gifts Tax Deductible?

With the festive season rapidly approaching, end-of-year celebrations, work functions and family engagements are in full swing. This period is often extremely busy for employers; not only are you working through your own personal shopping obligations, but you’re also contending with professional to-do-lists and workplace gift-giving.

With all of this in mind you may be wondering, are Christmas gifts tax deductible? Let’s take a look.

Are Christmas gifts tax deductible?

While Christmas can be a great time to show your appreciation to your staff and business network, there may betax implications depending on what the gift is. The ATO does also allow for deductions of client, supplier or business associate Christmas gifts, but there are criteria that outline what kinds of gifts are tax deductible, and what gifts are not.

Are staff Christmas gifts tax deductible?

It’s always best to act in accordance with your accountant or financial consultant's advice. For the time being, we’ll share a quick guide to the ATO’s gift giving criteria.
Firstly, is the gift:
  • Non-personal,
  • A ‘one off’ gift
  • Non-excessive (Under $300)
  • Not considered a reward for services
If the gift passes this criteria, you may avoid the Fringe Benefit Tax (FBT) and be granted the Minor Benefits Exemption (MBF).  
Avoiding f ‘entertainment’ gifts will allow you to avoid the FBT, as well as claim the item cost under business expenses.
What forms of entertainment are not subject to tax deductions?
  • Movies/Theatre/Concerts
  • Sports
  • Holidays
  • Flights
  • Live Events
  • Club Memberships 
What sort of gifts are subject to tax deductions?
  • Hampers
  • Flowers
  • Wine/Spirits/Beer
  • Gift Vouchers
  • Groceries

Are Christmas gifts to clients tax deductible?

 Importantly, FBT rules do not apply to your clients. Therefore, as long as they are ‘non-entertainment’ and do not exceed $300, you will be able to claim these purchases as business expenses.
 Here’s a handy checklist to ensure your gift meets the criteria:
  • It is beneath $300
  • It is ‘non-entertainment’
  • It is once off
  • It does not incur FBT

Which gift cards are tax deductible for your clients this Christmas?

Opting for prepaid convenience based gift cards, grocery or department store outlets or diverse online service providers will be the simplest way to avoid the area of ‘entertainment’ while still providing some value for your client and showing your client they are valued.

Are Christmas gifts to employees tax deductible?

So, are Christmas gifts to employees tax deductible? When it comes to gifts for your own staff, it is important to remember that they will be subject to FBT and will not be subject to business expense deductions if they do not pass the specific criteria. Therefore, different accounting will be required to incorporate these additional charges. 
Now that you know which Christmas gifts are tax deductible, it’s time to get shopping!  
As mentioned, gift cards are a tax deductible gift. They’re also the perfect gift for your employees. They’re personal and thoughtful — especially when you take the time to add a video or written message, which is possible with all Card.gift digital gift cards — and they put the choosing power in your giftee’s hands.  
At Card.gift, there is an extensive range of cards to choose from, allowing you to pick something special and considered for each employee. You can explore the full range of Card.gift tax-deductible gift cards here
 For additional information, visit the ATO’s guide to tax-deductible gifts.