Last month we revisited how your annual work Christmas celebrations and FBT relate, this month let’s touch on Christmas celebrations for clients and suppliers. If you hold a party for clients and suppliers, there is no FBT however, the costs are not deductible from income tax.
Gifts
If you give a gift to clients and suppliers you are generally able to claim a tax deduction for this as long as the gift was given with the view of generating future income in the business.
However, keep in mind that you will not be able to claim a deduction for gifts of capital items, such as technology- an iPad for instance. You also can not claim a deduction if the gift is for private purposes.
The line between a gift and the provision of entertainment can be hazy, so talk to your accountant at Rubiix if you’re not 100% sure whether you’re giving a gift or providing entertainment, and if it is a tax deduction for your business.