Gifts for staff and associatesAt this time of year as your small business accountant we often get asked the question on how best to reward hard working and loyal employees with gifts of appreciation. Provided that these gifts are infrequent and not overly excessive in value these gifts provided to employees are usually an acceptable income tax deduction and GST credits can also be claimed, where applicable. These include flowers, wine, perfumes, and gift vouchers and so on. Such gifts are classified as non-entertainment gifts and when given to staff members do not fall within the FBT rules.
However a word of caution is needed here. These gifts are generally accepted, but the giving of gifts such as concert and sporting event tickets and holidays would be classified as the provision of entertainment to employees and therefore not deductible and potentially subject to FBT, depending on the amount and frequency of the gifts provided. Generally a tax deduction and GST credit cannot be claimed for these gifts as they would come under the minor benefit rules, provided that their GST inclusive value does not exceed $300.00. Likewise, the very same rules will apply to the provision of gifts to business associates such as valued customers and suppliers.