“Is my business lunch a tax deduction” was our article last month for leading Start-Up publication, Shoe String Why? Because it is one area which causes a lot of confusion and start-ups and small businesses want to understand whether meals (and coffees) can be claimed as a tax deduction.
It’s not a black and white area so we thought that some simple tips can help go a long way in working out whether you can claim a tax deduction. So what are the questions that you should ask (and that the ATO wants you to consider):
- Why is the food or drink being provided – i.e. what is its purpose of the event. If it is provided in a social setting, then the chances are that is is entertainment
- What food or drink is being provided – is it a light meal provided at work or is it a set menu with matching wines. As the meal starts to become more elaborate, it starts to take the character of entertainment
- When is the food or drink being provided – meals provided during work hours are less likely to be entertainment, however with this point it’s especially important to consider the purpose and whether it is social.
- Where is the food or drink being provided – meals consumed on your business premises are less likely to be entertainment. At a restaurant, it is difficult to say it isn’t.
It’s important to consider these initial steps to help you work out whether you can claim a tax deduction on meals (and coffees).
And for more information on this, and the next steps we take at Nudge, you can read my article here.