With the festive season imminent, we remind you that deductions for “entertainment expenditure” are generally limited to 50% of the cost incurred. There are however a number of exemptions which may enable you to claim a full deduction.
Below is a summary of the deductions available:
|Morning & Afternoon Tea||No||Yes||No|
|Taking clients (existing or potential) to lunch||Yes||No||No|
|Friday Drinks, Christmas Party||Yes||No||No|
|Gift Baskets (food & beverages) *||Yes||No||Yes **|
|Gift Baskets (excluding food & beverages) *||No||Yes||Yes **|
|Dinner out of town (no client present)||No||Yes||No|
|Overseas travel, including meals with clients||No||Yes||No|
|Meal or Beverage Vouchers (as an award) *||Yes||No||Yes **|
|Other Vouchers (excluding food & beverages) *||Yes||No||Yes **|
|Meal Allowance paid to staff working overtime||No||Yes||No|
* Gift baskets of food and beverages and meal vouchers are only 50% deductible however non-food and beverage items are 100% deductible. To get the maximum tax deduction it is necessary to calculate or apportion the costs between 50% and 100% deductible items. In many cases the cost associated with this will be more than the expense and therefore we suggest claiming 50% only.
** Although this expenditure falls within the FBT rules, FBT will generally only be payable if the $1,200 per employee (max $22,500 per employer) is exceeded.