The holiday season is a perfect time to show appreciation to both clients and staff, and gifting can be a meaningful way to strengthen relationships. For clients, thoughtful gifts can enhance loyalty and demonstrate that their partnership is valued. For staff, recognizing their hard work and dedication boosts morale and reinforces a positive workplace culture. By investing in thoughtful gifts during Christmas, businesses can create lasting impressions, foster team spirit, and build stronger connections that extend well beyond the holiday season.
Monetary rewards for employees
Cash bonuses need to go through the payroll system and PAYE and other applicable payroll taxes need to be deducted, like any other wage or salary payment. A bonus payment is classed as a ‘lump sum’ payment and is taxed at a flat rate based on what income range the employee falls into.
Client gifts
When gifting clients, some gifts are fully tax deductible, while others—such as those involving food, drink, or other forms of entertainment—are only 50% deductible. Here are some examples to guide you:
| 50% deductible | 100% deductible |
| Hamper with gourmet food Box of chocolates or biscuits Christmas ham Bottle of wine | Presents (not food or drink) Book or gift voucher Movie tickets Flowers |
Remember to make a GST adjustment for entertainment expenses, which are only 50% deductible. YHPJ will check this for you when preparing your income tax return and advise you to include the adjustment in your next GST Return.
