BOXING DAY ACCOUNTING: WHAT CAN YOU CLAIM?
THOUGH THE FESTIVE SEASON and its excesses feel far behind us, it’s only now that many agencies are accounting for their holiday expenses. Client Christmas party? Tick. Landlord gifts? You know it. Company Christmas party? That’s there too. How much can y
Rather than nursing a sore head over your necessarily generous seasonal expenditure, now’s the time to focus on accounting for these costs to benefit your business – and gaining a better understanding of the tax implications of gifting and hospitality. A little attention to detail now will result in a 2016–17 tax return you’ll feel more than jolly about.
They’re your clients, and you love ‘em – so you treated them to gifts over the holiday season. That makes good business sense and good tax sense, too. Gifts to clients are, broadly speaking, tax deductible, giving rise to GST credits. If your gift will promote your business and create goodwill – leading to further repeat business or referral custom – you’re free to claim away. Note that client gifts should not be subject to fringe benefits tax, and that you cannot claim deductions or GST credits if gifts relate to entertainment.
Your team are worth celebrating with presents! Gifting, however, can be complex in terms of tax. Should you give your team a gift worth less than $300, this cost would generally be exempt from fringe benefits tax. Gifts in excess of this amount are generally subject to fringe benefits tax in the hands of the employer – regardless of whether they’re given at a Christmas party or not. Not all is lost, however; employers can often claim deductions and GST credits for the cost of these gifts. The main exception is where a gift relates to entertainment (such as tickets to the tennis or the theatre). Entertainment gifts are considerably more complex to handle in terms of accounting, so consult with your agency accountant for more details on your circumstances.
Small gifts given to your team irregularly throughout the year, with a value of less than $300 including GST, are described as minor benefits. These include bottles of vino, hampers, pens and