Christmas Entertainment & Gift Rules: What Your Business Can Claim in 2025
As Christmas approaches, many businesses are planning staff functions, gifts, and client appreciation. But when it comes to tax deductions, the rules around entertainment, FBT, food and drink, vouchers, and gifts can become confusing.
To help you stay compliant and maximise your allowable deductions, we’ve summarised everything in one place.
🎉 1. Staff Christmas Parties – 50% Deductible
Whether your function is held at a restaurant or in your office, staff Christmas parties are classed as entertainment and are 50% deductible.
Examples that are 50% deductible:
Staff Christmas dinner at a restaurant
Catering for an in-office party
Bar tabs or drink purchases
Venue hire for a celebration
Any celebration meal, party, reception, or similar staff function
Why only 50%?
Entertainment rules apply because there is an element of private enjoyment for staff.
🎁 2. Staff Gifts – FBT, Vouchers & Deductibility
When giving gifts to staff, two sets of rules apply:
Fringe Benefit Tax (FBT)
Entertainment deductibility
✔ FBT De Minimis Thresholds
A gift is exempt from FBT only if BOTH conditions are met:
1️⃣ Per employee: Value of unclassified benefits is under $300 per quarter
2️⃣ Employer total: Total unclassified benefits for all staff is under $22,500 across the last 4 quarters
If either threshold is exceeded, FBT applies to the full value.
✔ Deductibility of Staff Gifts
100% deductible (non-entertainment gifts):
Books
Flowers
Plants
Branded merchandise
Office items
Vouchers for goods/services (not food or drink)
Movie tickets (not corporate boxes)
50% deductible (entertainment gifts):
Hampers with food/drink
Bottles of wine or beer
Chocolates, food crates, gourmet baskets
Restaurant vouchers
Any gift consisting of food or drink
✔ Vouchers: PAYE vs. FBT
Cash-convertible vouchers → PAYE applies
Examples:
Prezzy cards
Open-loop gift cards (Visa/Mastercard style)
Vouchers that can be exchanged for cash
These are treated as salary/wages, so PAYE must be deducted.
Deductibility: 100%
Non-cash-convertible vouchers → FBT rules apply
Examples:
Countdown voucher
Mitre 10 voucher
A specific-store or specific-item voucher
Deductibility depends on the underlying gift:
Entertainment → 50% deductible
Non-entertainment → 100% deductible
🎁 3. Client Gifts – Different Rules Apply
The FBT $300 rule does not apply to client gifts — that rule is solely for employee benefits.
Deductibility depends on the type of gift.
✔ 50% deductible (entertainment gifts):
Wine
Craft beer
Gourmet food baskets
Chocolates, biscuits, edible hampers
Restaurant or café vouchers
✔ 100% deductible (non-entertainment gifts):
Branded merchandise (pens, diaries, towels, reusable bags)
Books or stationery
Flowers or candles
Plants
Vouchers for goods/services (not food/drink)
Movie and event tickets (excluding corporate boxes)
🍇 4. Mixed Gift Baskets – Must Be Apportioned
When a gift basket contains both entertainment and non-entertainment items, the costs must be split.
Example:
A real estate agent sends a Christmas basket containing:
Bottle of wine
Cheese
Tea towels
Soap
Deductibility:
Wine & cheese → 50%
Tea towels & soap → 100%
Businesses must keep records showing how the apportionment was calculated.
✈️ 5. Entertainment Outside New Zealand – 100% Deductible
Food and drink consumed overseas is not subject to the 50% entertainment limitation.
This includes:
Staff meals overseas
Client meals overseas
Hospitality enjoyed outside NZ borders
These expenses are fully deductible.
💬 Need Help?
If you’re unsure how a particular gift, function, or voucher should be treated in your business, feel free to contact us — we’re happy to help you get it right.
Email us anytime at info@hunterwithers.co.nz