What you can claim: You can claim the entertainment expense that relates to your business such as the cost of entertainment to build up business contacts, keep your employees happy or promote your goods or services as an expense. If it is helping you earn your income, it could be 50% or 100% deductible.
However, you can never claim your private entertainment expenses, even if you pay for them from a business bank account.
100% deductible entertainment expenses: You may able to claim 100% of the expense as a deduction under the specific rules. You need to check the rules carefully when there is a mix of situations which have different rates.The following is a list of fully deductible entertainment expenses:
- Food and drink: You can claim 100% of the cost of food and drink while travelling on business. However, you can only deduct 50% of the cost of the food and drink if the travel is mainly for the purpose of enjoying entertainment.
- Light meals: You can claim 100% the cost of light refreshments like morning and afternoon teas.
- Freebies: You can claim 100% the cost of freebies promoting your business. However, you can only deduct 50% of the cost of freebies if you give employees or people associated with you.
50% deductible entertainment expenses: If the entertainment expense is not completely business related, you can only claim 50% of the expense as a deduction.
The following is a list of 50% deductible entertainment expenses:
- Social events: You can claim only 50% of the cost of cultural, sporting, other recreational events. This applies to the cost of tickets and any food and drink provided.
- Holiday accommodation: If you have business expenses for a holiday home, you can claim only 50% of the cost of accommodation as well as 50% for food and drink expenses relating to using the accommodation.
- Food and drink: You can claim only 50% of the cost of food and drink you provide at your business premises like a celebration meal, party, and reception. Food and drink provided away from your business premises such as taking a client to lunch is also only 50% deductible.
- Food and drink gifts: Gifts of food and drink that will provide a private benefit to the recipient and a business benefit to your business are only 50% deductible.