Entertainment Expenses – What You Need to Know

With the “silly season” just around the corner it is an ideal time to remind you of the deductibility of Entertainment Expenses.

There are specific rules around Entertainment Expenses, some are fully deductible, while others are only 50% deductible.

Did you know that you can claim the cost of entertainment that relates to building up business contacts and keeping your employees happy as an expense?

The idea is, if it’s helping you earn your income, it’s usually deductible when it’s time to work out your tax.

Below is some examples of what is 50% Deductible and 100% Deductible.

50% Deductible 100% Deductible
· Food & drink at work for staff, clients at a social event · Food & drink while travelling on business and not with clients
· Food & drink for staff or clients away from your business premises · Food & drink provided at a conference or course that lasts for four consecutive hours or more
· Gifts of food & drink for staff or clients · Providing  morning & afternoon tea for your staff
· Corporate boxes or sporting events for clients or staff · Donating food to a children’s hospital for a Christmas party
· Taking a client out for dinner · Entertainment enjoyed or consumed outside New Zealand including waters around New Zealand for business purposes
· Staff Christmas party on or off the business premises
Most importantly keep records – When you deduct an expense you need to have invoices and receipts to support this deduction.

Make sure you have detailed records of the people you entertain, the date and the reason.  At the end of the year, it will be easier for you and for us to complete your income tax return.

As the rules and exemptions are complex, click the link below for more detail on some of the more common types of expenses and their treatment.

Guide To Entertainment Expenses

If you want to know more, please contact us.