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Entertainment Expenses

Some entertainment expenses are 100% deductible and some are only 50% deductible.

Do you know how to differentiate between deductible and non deductible expenses?

Lets take a look at some examples of tax deductible entertainment expenses in NZ…

If you or one of your employees are travelling on business, you are entitled to claim 100% of the cost of meal as a deductible business expense.

At a glance, this seems to be at odds with the rule that states that food and drink provided away from your business premises is only 50% deductible.

You also need to consider if the purpose of the trip is mainly for enjoying entertainment. If this is the case, the cost of the meal becomes a supporting expense and is only a 50% deductible business expense.

The 50% rule also applies if there are existing or potential clients as guests at the meal or function, and if the meal is a celebration, party, or similar occasion while travelling.

Another specific rule states that Food and Drink you provide at a conference, education course or similar is 100% deductible, if the event lasts more than 4 consecutive hours (not including meal breaks)

The above highlights the need to check carefully and make sure you have a good understanding of the rules when there is a mix circumstances which may give rise to different rates.

Fringe Benefit Tax can also apply. The rules can get complex and tricky to understand.

As qualified accountants, we can advise and help you determine the correct treatment of your expenses and fringe benefit tax.

Contact us for advice and ensure you get it right first time!