But there can be a catch, Deloitte Dunedin tax partner Peter Truman warns.
The Inland Revenue Department will be monitoring expenditure on things like staff and client functions and gifts to staff and clients.
Although the rules relating to those activities are well published, there were still some pitfalls, he said.
Functions where food, drinks and entertainment were provided were likely to be subject to the entertainment expenditure rules. Those rules state only 50% of the expenditure could be claimed back as a business deduction for tax purposes and only 50% of the GST content could be claimed back.
Included in the entertainment rules were costs associated such as venue hire, music or entertainment and waiting staff, Mr Truman said.
Incidental food provided on the business premises was fully deductible.
"A morning tea shout for staff on the last day of work for the year is not subject to the entertainment rules."
The cost of any business function held outside New Zealand was fully deductible.
Gifts to staff could be subject to fringe benefit tax (FBT). There was an exemption for small items which meant that no FBT would be paid if the value of benefits provided over a three-month period did not exceed $300 per employee and the total value of all benefits provided over a 12-month period by the employer - including any related entities - did not exceed $22,500.
For generous or large employers that did not fit within those concession, FBT was payable on the full value of staff gifts, he said.
Employers could choose to calculate FBT based on income levels of each employee which would have appeal where the costs savings were sufficient to justify the additional administration.
Any gifts to clients that consisted of food or drink would be subject to the entertainment expenditure rules, with only 50% of the cost being deductible, Mr Truman said.
The cost of other gifts to clients would be fully deductible to a business.
It was not uncommon for businesses to make gifts to charities in place of gifts to staff, presumably with the approval of staff, he said.
Provided the donation was made to a registered charity, the donation might be a deductible expense for the business.
Deductions for donations made were available provided the business had a taxable profit for the year of an amount exceeding the donation made.
