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Entertainment expenditure - gifts of food and drink

The entertainment expenditure rules in subpart DD of the Income Tax Act 2007 limit tax deductions for certain types of expenditure to half the deduction normally available.

One type of expenditure covered (with exemptions) is expenditure on providing food and drink off business premises.

This means that spending on things like chocolates or a bottle of wine to give as gifts to customers, clients or suppliers for example, will not be fully deductible.

If the items are purchased as a gift basket or together with other items that aren’t food and drink, the expense must be apportioned between fully deductible and not fully deductible.

Source www.ird.govt.nz