Gifts for employees and clients: Tax FAQs answered (with fewer yawns and more fizz)
If you’re an Australian business owner trying to spread joy this festive season (and maybe a little business goodwill too), chances are you’ve asked the age-old question: “Are gifts to employees and clients actually tax-deductible?” Because while gifting a bottle of champagne or a beautifully curated hamper feels right, the tax implications? Well… less joyful.
Fear not! We’ve untangled the tax spaghetti for you. So whether you're gifting non-cash goodies like our epic gift hampers or sending a little love via gift vouchers, here’s what you need to know to keep the ATO happy—and your staff and clients even happier with Good Day People.
🎁 What types of gifts are tax deductible?
Let’s start with the good stuff (literally). When it comes to tax deductions, not all gifts are created equal. Gifts broadly fall into two buckets: entertainment and non-entertainment gifts.
Here’s the cheat sheet:
- Non-entertainment gifts include: gift baskets, gift hampers, skincare, beauty products, candles, flowers, perfumes, gift cards, gift vouchers, bottles of wine, Slowdown Studio blanket and yes—even a cheeky bottle of champagne.
- Entertainment gifts include: tickets to shows, sporting events, movies, concerts, or holidays.
For the best tax outcome, opt for non-entertainment gifts. These offer more favourable tax deductions, especially when they cost less than $300 (including GST). Why? Because they often qualify for the minor benefits exemption under Fringe Benefits Tax (FBT).
👨💼 Are employee gifts tax-deductible?
Yes, but it depends on the type of gift and its value.
If you're gifting your employees a non-entertainment item valued under $300 including GST (say, a luxe Good Day People hamper), it ticks a lot of boxes:
✅ Fully tax deductible
✅ You can claim a GST credit
✅ No Fringe Benefits Tax payable, thanks to the minor benefits exemption
The gift must be infrequent, not a reward for services, and under $300 per benefit. You can even give a similar non-cash gift to an employee’s spouse or partner and still enjoy the same favourable tax outcome.
🍷 What if your non-entertainment gift costs $300 or more?
This is where it gets a bit “meh”. If your gift exceeds the $300 threshold:
- You can still claim a tax deduction and GST credit
- But FBT kicks in at a hefty 47% of the grossed-up value
So, while your bottle of Veuve may earn you brownie points, it also earns you a bigger tax bill.
Our advice? Keep your staff gifts luxe, local, and just under the $300 mark. (It’s not about spending less—it’s about spending smart.)
💼 Are gifts to clients tax deductible?
Good news! Non-entertainment gifts to clients are generally tax-deductible and allow you to claim a GST credit—so long as they’re not extravagant or excessive.
Gifting a beautiful hamper packed with artisanal Aussie treats to a client? That’s a deduction for gifts you can count on. Gifting them tickets to the AFL Grand Final? That’s an entertainment expense, and you can’t claim a deduction or a GST credit.
To summarise:
| Type of Gift | To Employees | To Clients |
|---|---|---|
|
Non-entertainment < $300 |
Tax deductible, no FBT, GST credit |
Tax deductible, GST credit |
|
Non-entertainment ≥ $300 |
Tax deductible, but FBT applies |
Tax deductible, GST credit |
|
Entertainment < $300 |
No tax deduction, no GST credit, no FBT |
Not deductible, no GST credit |
|
Entertainment ≥ $300 |
Deductible + GST credit, but FBT applies |
Not deductible, no GST credit |
🧾 What counts as entertainment?
To be crystal clear, here are some common examples of entertainment expenses:
- Concert tickets
- Movie vouchers
- Theatre shows
- Sporting events
- Holidays or travel experiences
These are not tax-deductible when given to clients. And when given to employees, they usually trigger FBT unless they fall under the minor benefit exemption.
💡 Tax strategy tips for business owners
Here’s how to keep your business finances and tax savings in check while still being wildly generous:
- Choose the right type of gift: Non-entertainment = good tax vibes. Think: hampers, gift boxes, gift vouchers, bottles of wine.
- Stick to the $300 rule: It’s your best chance to avoid FBT and still claim deductions.
- Don’t go overboard: Excessive or frequent gifts may not be seen as minor benefits and could invite scrutiny.
- Use gifts to build future income: Gifting is more than generosity—it’s an investment in client relationships and employee loyalty, which can absolutely lead to future business and future income.
- Talk to a tax advisor: For major gifting plans, always consult a professional for guidance on tax implications and how to maximise your deductions on gifts.
✨ What about gift cards and vouchers?
We love a good gift voucher (ours are pretty fab if we do say so ourselves). From a tax perspective, non-cash gifts like gift cards are considered non-entertainment, meaning:
✅ Fully deductible
✅ Eligible for GST credit
✅ May qualify for minor benefits exemption (if under $300)
So yes, a digital gift card to Good Day People? Possibly the most tax-savvy swipe you'll make this holiday season.
🎄 Gifting during the festive season
The festive season is when generous gifting goes into overdrive—but don’t let that turn into a tax trap.
For Christmas staff parties, costs are usually considered entertainment and not tax-deductible. But combine that with some beautifully wrapped non-entertainment staff gifts under $300 and you’re back in tax-deductible territory (ho-ho-ho!).
Same goes for client gifts: instead of footing the bill for a fancy dinner, a well-thought-out hamper can leave a longer-lasting impression and earn you tax benefits.
🧠 Neuroscience-backed takeaway (yep, we went there)
Giving gifts activates the brain’s reward centres and builds emotional connections—key for both employee motivation and client retention. But the dopamine hit is way sweeter when your accountant isn’t having a meltdown about FBT.
🎉 TL;DR: Make it a Good Day (and a smart tax one)
- 🎁 Non-entertainment gifts under $300 = yes please (to both the recipient and the ATO)
- 🎟 Entertainment gifts = less tax-friendly, more tax frowny-face
- 🍾 Bottles of wine, gift hampers, and vouchers = the gifting holy trinity for deductible gifts
- 💼 Corporate gifts? Think business goodwill with a material benefit twist
- 📚 Always chat with a tax expert for advice tailored to your business
Want to keep your tax-deductible gifts classy, conscious, and curated? Browse our gift hampers, corporate gift boxes, or simply grab a Good Day People gift card and call it a (Good) Day.
Because gifting can be joyful and clever. And we’re here for it.
