By Monica Halberstadt CPA Prof Corp on Sunday, 29 May 2022
Category: CRA

Are Gifts Deductible Expenses?

Giving gifts to clients can be a valuable method of building goodwill and loyalty. It’s one way to distinguish yourself from your competitors. Gifts are usually given during holiday seasons, for birthdays, significant transactions or simply as a thank you. When you buy a gift for use in business, you need to know if it qualifies as a tax deduction.

While gifts passed on to customers are deductible, there are certain conditions that you must be aware of:

Gifts to clients are generally included in the advertising and promotion account unless meals or entertainment are involved. Like the latter, it is only 50% deductible. Such expenses should be recorded in the meals and entertainment account.

The bottom line is that businesses claiming gifts as a deductible expense should have substantiation for the contribution and record clear reasons for the purpose.

If you are unsure whether your generosity qualifies as a deduction, contact our office for help.

Related Posts

Leave Comments