Tax deduction, business lunch

“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):

  1. 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
  2. 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
  3. 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.
  4. 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.

Cheers
Emma