Can you claim gifts for your employees, clients, and suppliers as a business expense? No, Gifts are classified as “entertainment” hence not claimable or subject to Fringe Benefits Tax (FBT).
However, for gifts such as hampers, food, wine, vouchers etc., these are not deemed to be entertainment. If the gift is under $300 value, the gift is not tax-deductible, and therefore GST is not claimable for gifts to employees and their family members, suppliers and clients. No FBT applies to gifts under $300. Gifts over $300, FBT may apply for employees and their family members, but FBT doesn’t apply to clients or suppliers.
Gifts such as a holiday, membership to a membership to a club, or tickets to a theatre, sporting or musical event are considered to be entertainment. These gifts are not tax-deductible, and no FBT applies, including for clients and suppliers. For employees, the gift is tax-deductible as it is not a minor benefit and is also subject to FBT.
As a business owner it’s your personal choice to give your clients a gift at Christmas, but be aware that some client may not be allowed to accept gifts due to their business’s Code of Conduct (e.g., government workers).
It can be a mind field the topic of entertainment, tax-deductibility and fringe benefits it’s complicated and not always straight forward. That is where we are here to help you and assist. Please call us if you have any questions or refer to the ATO website for detailed guidance.