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:
| Activity | Deductible | Subject | |
| 50% | 100% | to FBT | |
| 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.