If you are thinking of buying Christmas gift baskets, wine, ham or restaurant vouchers for your clients or staff – beware! The IRD have stated that they will only allow a 50% deduction for your Christmas function or work gifts if provided to people such as employees, clients, suppliers or prospective clients and suppliers.
Previously the IRD allowed a 100% deduction for costs incurred on providing gifts to clients and suppliers that contained food or beverages. Now, however, only 50% of such costs will be tax deductible and the IRD considers that where such gifts such as gift baskets contain non-food or beverage items, costs must be apportioned. If this policy is not adhered to, this may result in a tax shortfall penalty being imposed.
For further information or to discuss this further, please call your Giles & Liew Account Manager.