The Holiday period is right around the corner, are you planning a Christmas event for your clients? Is gift-giving on your to-do list?

Take a minute to refresh yourself on how much is deductible as a business-related expense.

Presents

Are you thinking of gifts for clients, business associates or team members?

If gifts consist of food or drink, you can only claim 50% of the expense as a tax deduction. If gift baskets or hampers contain some food or drink and some other goodies, the food or drink items are 50% deductible, but other gift items are 100% deductible.

Note that when you claim the tax deduction, you need to apportion the expense between the 100% deductible items and the 50% deductible items. Let us know the details.

Parties

The basics: an expense is business-related if you spend the money to help your business earn income. Business-related expenses are generally fully deductible.

If the expense does not help your business earn gross income, it is a private expense, not claimable as a deduction. Purely promotional events put your brand out there and are a marketing expense for the business. But entertainment events such as Christmas parties inhabit a grey area sometimes and may be limited to a 50% deduction.

You will need to make a GST adjustment for any entertainment expenses which are 50% deductible. This will be required when your income tax return is filed.