A common question asked of Fletcher HQ, especially being Christmas time – would giving a gift to a client be tax deductible?

It should generally be possible for the client to claim a deduction for the cost of gifts provided to customers if they are incurred with the purpose of advertising the business and generating goodwill and future business opportunities. The client needs to demonstrate that the expenses are incurred with the intention of generating future assessable income.

The main exception is where the gift is classified as ‘entertainment’. Entertainment examples comprise of:

• providing entertainment by way of food, drink or recreation
• providing accommodation or travel in connection with such entertainment, or
• paying or reimbursing expenses incurred in obtaining something covered by the above point.

Hope this helps determine your Christmas shopping!