July Tawny Frogmouth

Howdy Tawnies, Tom here from Beaches Accounting, your small business accounting specialist. As everyone gets set for their epic end of financial year parties, or you’re perhaps nursing a new financial year hangover, I thought a friendly reminder on what constitutes an “entertainment expense” might help local businesses stay out of trouble with our dear friends at the Australian Taxation Office Quite simply, the ATO look at 4 key factors when assessing the tax-deductibility of entertainment expenses:

1. Why are you buying the food and/or drink? And what that means in a more straightforward commercial way, is there a business purpose for it? A social coffee catch-up at the local café with a client is unlikely to be tax deductible, while a clear agenda and business purpose for the meeting and associated “entertainment” is.

2. What type of food and/or drink are you buying? Expensive lunches replete with lavish wines and decadent desserts aren’t looked at with abundant fondness by the Australian Taxation Officers.

3. When are you providing the food and/or drink? During customary work hours is more likely to yield a tax deduction as opposed to the rather generous 11pm round at the pub.

4. Where are you providing the food and/or drink? For a tax deduction, meals consumed in the course of regular business are safer than at one-off events such as a charity golf day. P