Businesses may give away free goods for business purposes. Common examples of freebies given away are business gifts and samples for marketing purposes.
Gifts
It is common for businesses to give away gifts to employees and customers during festive occasions and company events. Do you need to account for GST on gifts?
Although these goods are given away for your business purposes, you will need to account for GST based on the open market value of the gift if you have claimed input tax on its purchase. An exception is if the cost of the gift is less than $200 (excluding GST).
Commercial Samples
As part of marketing activities, businesses may give away free samples of their products. Do businesses have to account for GST for these commercial samples?
If the free samples are for your potential and actual customers and in a form not normally available for public sale (i.e. the sample can be easily differentiated from actual product available for sale and marked with words such as "Not for sale" or "Sample only”), you do not have to account for GST when you give them away.
