Tax Issues - Australia Only

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Is Entertainment Deductible?

Can I Pay Less Tax By Taking My Clients To Dinner?

Entertainment is not deductible. And many people will stop reading here, but there are times when entertainment is not entertainment, so read on!

No Dinners

Many years ago, the government wanted to stop the fat cats from getting a tax deduction for what they considered private expenditure, so the long expensive lunches became a thing of the past.

However, this doesn’t always mean that sharing a meal with a client is entertainment.

Meals At Your Desk

For instance, if you are working in the studio and you send out for lunch, then as long as you eat it in the studio and it doesn’t include alcohol (it’s just a simple lunch), it may be tax deductible to your business.

Now for the fine print: this works much more easily if you are a company or a trust, but if you are a sole trader, then the food for yourself may not be deductible, just the meal for your client. It depends. Why? Just because it does! Have a chat to your accountant and see how it could work in your specific situation.

If you are a company or a trust and you’re an ‘employee’, the company can buy you lunch every day as long as you are eating it at your desk. This is definitely something to consider and is worth a question to your accountant.

Similarly, your business can provide you and your clients with tea, coffee and the very nicest chocolate biscuits as a tax deduction. This would apply to sole traders as well as companies and trusts, being office or general studio expenses.

So, no lavish lunches at a restaurant, but take-away and eaten on the job may be okay. What about a drink or two?

Alcohol

As A Gift Taking a client out for a beer after work is clearly entertainment and you have no hope of a tax deduction. Even purchasing beers or wines and drinking them in the studio is considered entertainment.

The only way that I can think of giving your clients a drink is to present them with a bottle of Scotch or wine, or a case of beer. It can be provided to them as a gift.

Now, some people are going to say the client could then open and drink the scotch with them in the studio, but I think you’ll find it then becomes entertainment, so make sure you march your clients off the studio premises before they open that bottle!

Small gifts to clients can be tax deductible.

This is general information only. We do not know your specific financial or legal situation and we are not providing you with advice. As such, this article should not be relied upon as legal, financial or accounting advice. Please use this article as a conversation starter with your own

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