Is cash payment provided to a current client deductible

 Author: JayATO(Community Support)Community Support

30 Apr 2026

Hi @ahuie,

The deductibility of a cash payment made to a current client in relation to the death of a family member depends on whether the payment has the necessary connection to earning your assessable income. You've correctly referenced TD 2016/14, which states that a gift to a current or former client is generally deductible under section 8-1 if it's intended to generate future assessable income.

The key test is whether the payment is made to maintain or improve the business relationship with the client, with the objective of producing assessable income. A payment made as a gesture of sympathy for a client's loss can be deductible if it has a sufficient connection to the income-earning activities of the business. We look at factors such as:

• the nature of your business relationship with the client
• whether the payment is part of a broader business practice
• the intention behind making the payment
• whether the payment is expected to maintain goodwill and future business.

If the payment is made primarily for private or domestic reasons rather than for business purposes, it won't be deductible. The payment must have a clear business purpose and connection to your income-earning activities.

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