Claiming tax deductions on client gifts

Giving gifts to clients at the end of the year is always popular and may help you retain high value clients and generate more income for your business.

Under Australian Tax Office (ATO) rules, gifts given to a current or former client may be deductible at tax time if they are offered with the intention of generating future assessable income.

However, it is important to seek advice from your accountant or qualified tax professional before deciding to purchase client gifts this festive season as not all gifts are tax deductible. This includes sporting or theatre tickets, and gifts of a personal nature.

Gift giving that is tax deductible

As an example, Sally has a renovation business and decides to give a bottle of champagne to a client who had a renovation completed in the previous 12 months. She expects the gift will either generate future business from the client or encourage them to refer others to her business. Although Sally got on well with her client, the gift was not made for personal reasons.

https://www.smallbusiness.wa.gov.au/blog/claiming-tax-deductions-client-gifts