It’s that time of year again…
Before we know it, Santa will be sliding down the chimney and dropping off Christmas gifts to the good little boys and girls.
Unfortunately, Santa doesn’t do double time and drop off corporate gifts at the same time.
The ball is in your court to sort them out.
To make that job easier, we’ve put everything you need to know about Christmas gifting into this article. Read on to hear our wisdom now.
1. Budgeting for Christmas gifts
Sure it would be nice to buy a gift for everyone you have had contact with this year, but that probably isn’t practical from a budgeting sense. So, you’ll need to be realistic about what your business can afford this year.
Often, December and January can be quieter trading months, so you don’t want to blow all your expendable cash before you even hit those months.
Rather than setting a per-gift budget, we recommend creating a total budget you are happy to spend. Then, make a list of who you would like to gift to – you might choose key clients, colleagues, stakeholders, contractors, or other people who have helped your business.
Do some research to see how far your money will stretch and what kind of gifts you’d like to send. Then, see how that compares with our overall budget figure. Remember that you don’t have to buy everyone the same value gift. You can buy higher-value gifts for key individuals and lesser values for others. If you need to, whittle your list of recipients down to a practical number.
This number could differ for every business, so don’t feel you need to spend the same as other businesses. Be realistic about your business budget first.
2. Choosing Christmas gifts
It is traditional to send gift baskets, chocolates, hams or wine at Christmas. But you can break the mould by sending anything that you want. So many people have dietary restrictions or preferences these days, so those traditional gifts might not be appropriate for your recipients.
A thoughtful gift will be gratefully received and doesn’t have to break the bank. Here are some outside-the-box ideas for corporate gifting this year:
- Vouchers for an experience
- Donations to a charity
- Personalised items
- Care kits to recharge the batteries
- Plants or terrariums
- A movie night bundle with snacks and a Netflix gift card
- Pet toys for pet lovers
- Coffee beans
- Fortune cookies or cookies with messages
- Airplants
- Fruit boxes
- Spices or meat rubs
- Invitation for a family Christmas event
- IOUs for helpful tasks – mowing lawns, cleaning the office etc.
Basically, anything goes and the more creative, the better! Don’t be afraid to dive deep into who you are giving to and select something they will love. You don’t have to send the same thing to everyone.
3. Expensing
The great thing about corporate Christmas gifts is that they are tax-deductible expenses. There are a few rules to be mindful of, though:
- Most gifts are 100% tax deductible
- If the gift is food, drink or entertainment (including vouchers), then you can only claim half the cost
- Costs may need to be separated for things like hampers that contain some food items
- If you are providing entertainment for charitable purposes, then you can deduct 100% of the cost (i.e. donating food for a hospital party)
If you aren’t sure how to account for your Christmas gifts, it’s best to have a chat with your bookkeeper to make sure everything is recorded correctly. Feel free to reach out to the Admin Army team if you need help on the bookkeeping front.
4. Staff Christmas gifts
It can be lovely to recognise the work your team have done with a gift at Christmas time. Again, staff gifts can be a deductible expense. But like client gifts, gifts of food, drink or entertainment are only 50% deductible, but any other gifts are 100% deductible.
You do need to be mindful of attracting Fringe Benefit Tax with staff gifts. FBT can occur if a gift is given as a reward for good performance.
5. Christmas Parties
While we are discussing Christmas gifts, we may as well cover Christmas Parties too! Having an end-of-year celebration can be a great way to thank your team for an excellent year of work. But, there are some budget and tax considerations to think about.
Like your Christmas gifts, you don’t want to spend money for the sake of spending money. Set a budget for your Christmas party that you are comfortable with and stick to it. Remember that you will need to budget for a venue, food, drink, entertainment, and potentially things like transport.
If the costs relate to your business, half of your holiday party expenses can be claimed. You can find out more about entertainment expenses, double check with your bookkeeper for advice on this topic.
Need Some Help?
It can be tricky to navigate your tax obligations when it comes to Christmas gifting, so having expert advice can be really valuable.
Our team of bookkeepers are ready to help you with all the budgeting and expensing aspects of your Christmas gifting, so get in touch with us today.