# Gift cards for referrals a write off?



## The Coastal Craftsman (Jun 29, 2009)

Is this a possible write off? how it normally works is i tell customers that if they are happy with my work and they recommend me to another customer and i get the job they get a certain size gift card depending on the size of the job.


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## Golden view (Feb 16, 2012)

Yes you can write those off.


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## muskoka guy (Nov 16, 2013)

Don't believe you can in Ontario. We thought about that for Christmas bonuses for the crew, but got shot down by the accountant.


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## Warren (Feb 19, 2005)

To an employee, it would be construed as compensation. Giving one to another business is deductible as long as it is not given to an individual. An individual gift can only be up to $25 in a calendar year. The balance would not be deductible.


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## jaydee (Mar 20, 2014)

Sure is...

scratch tickets also, if you get a receipt.


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## Stephen H (Feb 18, 2011)

I would write it off as marketing.
Stephen

BTW--- I just sent a gift on monday to our printer whose advice and efforts made us a good bit of money this year------and to a supplier who helped us out with a delivery ( I bought something they don't carry---salvaged roof tile--- and had it delivered to their facility for ease of handling)

I will write that off as well.

Stephen


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## pcplumber (Oct 12, 2008)

Virtually, everyone give and receives referral fees, but I was told by the contractor's board about 40 years ago that any type of referral fee paid to anyone is illegal and there are anti-referral laws in place. The purpose of these laws is to eliminate inducing a customer to use the services of a business that they would not have made the decision to use on their own.

Incidentally, if is also against the law to advertise that something is free when the consumer has to do anything at all to get that free item with the exception of picking it up from your business. For example, for a short period, I was giving away free Mr. Coffee pots when a customer called for a free estimate to re-pipe their home. Believe it or not, it didn't take long for a competitor to get the contractor's board after me. So, that same type of thing may happen to you if you advertise that you pay for referrals.

I never consider giving something away for free to be a write-off like a write-off is some sort of magical move that benefits your company. Giving something away is a direct expense and the value is only something that reduces the net taxes you pay. Personally, aside from the benefit of giving something away, I would personally rather keep the cash in my pocket and pay the taxes. I would rather sell a junk car, keep the cash and pay the taxes on the cash than to give the car away and say that I did it for a write-off. 

Another problem with paying referral fees and giving gifts away is you had better keep some good records and be able to prove that the people you gave them to actually received them. Sure, I would love to purchase $100k worth of gift certificate from Nordstroms and the likes and then tell the IRS that I gave the certificates to my valued customers as gifts.


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## The Coastal Craftsman (Jun 29, 2009)

So how does it work when so many company advertise you can get a gift certificate for so and so company if you buy a product from that company. As an example a lot of company's around here would give a Sears/Macy's/Kroger etc etc gift card for buying a product from said company. A lot of car sales places advertise get a free $50 for above company's use for going to look at a new model car and take it for a test drive. There must be certain ways you can do it and it be a write off.


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