Are expenses incurred during client meetings over coffee or a meal tax deductible?

If a meal was incidental to a business meeting, then it may be deductible, however, if a meal given to a client is just ‘entertainment’, it may not be deductible. Generally, ‘entertainment’ expenses are not deductible, except in very limited circumstances.

Here at TaxAssist Accountants we often get queries about deductible expenses from clients who have met with customers at external venues eg a cafe.

We have to consider:

• What is the purpose of the expense?
  
  Is it just refreshment? – then it isn’t entertainment and it is likely to be deductible without Fringe Benefit Tax. Morning and afternoon teas and light meals as well as food or drink provided during work time (perhaps as part of a business meeting at a cafe) are less likely to be entertainment and therefore are likely to be a business deduction.
   
• Where and when and in conjunction with what else is the expense incurred?
  
  If consumed at the place of business then this is less likely to be entertainment. However, if consumed at a cafe or coffee shop it becomes more likely to be entertainment. However, what else were you doing at the time? Are you catching up for a chat and coffee or is actual business being done?

Going out for dinner or lunch with a client might seem like a great tax write off, but if the business is just a side chat, it’s entertainment.

This can be a complicated area. Please call in at your local TaxAssist Accountants and we'll be pleased to help.

Date published 7 May 2021 | Last updated 7 May 2021

This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.