With Christmas not too far around the corner, we thought it a good time to update you on IRD's current position regarding gifts to customers, clients and staff.

The IRD have recently reinterpreted their position on the giving of food and drink as gifts.  Where these are to be consumed off the business premises the IRD consider these to be only 50% deductible.  This is a change from their previous interpretation of these being 100% deductible.  The reason IRD say is that there is an element of both business and personal benefit from the gift – benefit to the business giving the gift and enjoyment for the person receiving it.  
So what does this mean:
  • If you give food or drink as a gift, including as part of a gift basket, this is only 50% deductible as an expense.  
  • If you give a gift basket which contains both food and drink and non-food items, you may need to split this cost of this between the two.  
  • If you give something other than food and drink as a gift, this is 100% deductible.  
So when looking at what to gift to your customers, clients and staff you may like to look outside the box on what to give.  Some ideas we have seen include:
  • Umbrella's or sunshades
  • Beach Towels
  • Pot plants
  • Gift Vouchers