Travel, meals, gifts and entertainment

Learn more about when you can claim travel expenses, meals, gifts to employees, gifts to clients and what rules apply to entertainment expenses.

Travel

  • You can generally claim a tax deduction for travel expenses you incur for business purposes if you are away from home overnight.
  • Travel expenses you may be able to claim include air fares, accommodation, meals and incidental expenses.
  • Make sure you keep your receipts or other written evidence.
  • If you are away from home for more than 6 nights you will also need to keep travel records such as a diary.
  • You need to apportion your expenses if they are partly private in nature.

Meals

Sole traders and partnerships
Meals and refreshment expenses are generally only tax deductible if incurred during business related overnight travel.
Food and drink provided to employees
  • If you provide food and drink to your employees or contractors that is not entertainment, then generally the expenses will be tax deductible, not subject to fringe benefits tax (FBT) and you can claim GST credits if present.
  • Refreshments such as tea, coffee and biscuits are generally considered to be non-entertainment where they are provided for the purposes of refreshment and consumed on employer's premises during meetings, training or overtime.
  • For FBT purposes, an employee may include: - current, future or past employee - director of a company - beneficiary of a trust who works in the business - cannot include a sole trader or partner in a partnership

Gifts

  • Gifts can be classified as entertainment or non-entertainment. The tax treatment of the expense depends on how the gift is classified.
  • Gifts that do not constitute entertainment may include: - Christmas hampers - bottles of alcohol - gift vouchers - perfume - flowers - pen sets
Gifts to clients, suppliers and contractors
  • Occasional gifts given to clients, suppliers and contractors may be claimed as a tax deduction if they are considered non-entertainment and offered with the intention of generating future business income or winning new clients.
  • If the gift is entertainment or given for personal reasons there is generally no entitlement to a tax deduction.
Gifts to employees or associates
  • Occasional gifts given to employees or associates may be tax deductible and exempt from fringe benefits tax if they meet the following conditions: - it is considered non-entertainment - the value of the gift is less than $300 inc GST - similar gifts are not provided regularly
  • Gifts for sole proprietors and partners in a partnership cannot be claimed as you cannot be an employee of yourself.
  • Associates of an employee may include: - spouse/de facto spouse of employee - relatives of employee

Entertainment

  • Entertainment expenses are not tax deductible.
  • If you provide entertainment expenses to your employees you will be required to pay fringe benefits tax.
Examples of entertainment
  • meetings with employees, contractors or clients at a cafe/restaurant.
  • social functions eg parties.
  • meals at a restaurant including alcohol.
  • sporting days or memberships.
  • reward and recognition functions.
  • accommodation and travel in connection with entertaining clients or employees.
Examples of non-entertainment
  • refreshments provided to employees, clients or contractors on business pemises in connection with meetings, overtime, training etc.
  • food and drink consumed by employees travelling overnight including conferences.
  • occasional gifts to employees and clients eg alcohol, Christmas hamper, flowers etc.

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I’m Sharon, a registered BAS agent and QuickBooks Certified Advanced with more than 20 years' experience in the industry.Get in touch to find out how I can support you and your business to stay on top of your numbers to run a successful business.
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