Christmas Gifting - What’s Claimable?
The countdown to Christmas is on! Many businesses are winding down and preparing to relax with family and friends for the holiday period. Although bookkeeping is probably the last thing on the mind at this stage of the year, finances might be a relevant consideration with Christmas commonly being a costly tradition! It’s always good to be aware of what’s claimable. Here’s a quick list of expenses you can claim for Christmas parties and gifts.
Please note, for Companies some expenses are 100% deductible while others are only 50% deductible. For Sole Traders, some expenses are less than 50%.
Christmas Staff Doo’s
Who doesn’t love a good Christmas party?! But it's also good to be aware of what the IRD allows as claimable expenses. The costs of food & drink and any incidental expenditure relating to things like hireage of crockery, glassware, music or other entertainment is only 50% deductible for income tax purposes – this applies whether the party is held on the business premises or off site.
Christmas Lunch/Dinner
For smaller businesses, often taking clients, colleagues or staff out for a meal is a better option. This is generally 50% deductible for companies and 25% deductible for Sole Traders
Gifts to Staff or Clients
It’s always nice to thank your staff or clients with a Christmas gift at the end of the year. The cost of these gifts (other than food and beverages) will generally be 100% tax deductible. However, Food, Beverages and Supermarket vouchers are deemed entertainment and only 50% deductible.
As long as you keep your gifting to staff or clients under $300 (incl gst) for the October to December period and they are not food or drink, these costs are 100% deductible. If you’re feeling generous and these gifts are over $300, Fringe Benefit Tax will be payable to IRD. However the costs can still be claimed as well.
Cash Bonuses
Sometimes the best way to say thank you for a year's hard work is a cash bonus. These should be included in the employees’ wages for the week and PAYE paid on them.
If you have questions regarding the above or anything else such as guidance relating to payroll over the festive season, please don’t hesitate to get in touch!
As we wind down on 2021, we would like to thank all the amazing clients we have had the pleasure of working with this year. With relaxation often comes reflection, so it’s the perfect time to consider the future of your business and what plans you can put into place to start fresh in 2022!
Kowhai Business Services will be closed from 11am December 24th, and we will be back again in the new year from January 5th.
Wishing you all happy holidays,
Melissa and the Kowhai Team