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Dec 23

Entertainment Expenses

Posted by James Burn on Wednesday, December 23, 2015

We often get asked,  "Are meals and drinks for myself and staff tax deductible?"
Here are some general guidelines on what would be a tax deductible expense and a link to the Inland Revenue information on Entertainment Expenses 
Generally, for the cost of the meal and the drink to be tax deductible, there must be a connection between incurring the expense and helping produce business income.  If the expenditure is incurred for yourself, having  a meal or a drink that would normally be private, than even if the cost is charged to the business account, this would still be private and not tax deductible.  
Here are some examples where the expenditure is 100% tax deductible:
  • Food and drinks are consumed while travelling away on business the expenditure unless the  travel is primarily for entertainment purposes, or the entertainment consumed at a social function.
  • Food and drink where the employee works overtime
  • Food and drink provided as morning or afternoon tea
  • Food and drink at a conference, training or event which lasts for at least 4 hours 
  • Entertainment provided to the public for charitable purposes
Here are some examples where the expenditure is 50% tax deductible:
  • Business lunch with client at restaurant
  • Gifts for clients
  • Friday night drinks for staff at work premises
  • Light working lunches provided to staff at work premises
  • End of year Christmas party for staff
If you are unsure, please contact us