Entertainment Expenses – Made Simple
Business is not all work and no play. You can also claim the cost of entertainment to build up business contacts, keep your employees happy or promote your goods or services as an expense. If it’s helping you earn your income, it’s usually deductible.
We will look at –
- The difference between business-related entertainment expenses and private expenses
- Which business-related entertainment expenses are 50% deductible and which are 100% deductible
Business-related entertainment expenses
An entertainment expense is business-related if you spend the money to help your business earn income.
100% Deductible –
o Food and drink while travelling on business
o Food and drink provided at a conference
o Promoting your business, products or services – if the business contacts or employees of the business being promoted have a greater opportunity to enjoy the entertainment than the general public, then it will only be 50% deductibl
50% Deductible – because there is a significant private element, generally entertainment away from work or out of usual work hours
o Offsite food and drink – e.g. business lunch at a local restaurant
o Gifts of food and drink – private benefit to the recipient and a business benefit to the business owner
o Food and drink at work e.g. a social event
o The cost of corporate boxes, marques or tents
What are private entertainment expenses?
If the expense doesn’t help your business earn gross income, it’s private and you can’t claim it as a tax deduction, even if you paid for it out of your business account e.g. Taking the family out for dinner and using the business credit card to pay for the meal.