This is just a reminder of a few things to be aware of, which are even more relevant at this time of year with all of the parties and presents....
"Entertainment Expenses" can be a tricky thing to figure out. They almost have to be judged on a case by case basis, but it's worth thinking about because in many circumstances, input tax credits on these items cannot be claimed, are not tax deductible and some may attract Fringe Benefits Tax.
While we are not in the business of providing tax advice, here are some general rules and things to consider:
- As a general rule, input tax credits cannot be claimed for Entertainment Expenses, and are not tax deductible.
- Entertainment Expenses are the cost of providing entertainment with food or drink or providing recreation, accommodation or travel in connection with the entertainment. E.g. business lunches, parties, tickets to sporting events.
- Not all food and drink is classed as "entertainment". Generally, if it is for the purpose of providing refreshment, for example, during a meeting or training session, it will not be classed as entertainment. Such as tea and coffee and light sandwiches. However, lunch at a restaurant during a business meeting is more likely to be "entertainment".
- If providing Christmas presents or putting on a Christmas party for clients, employees and perhaps their partners, the treatment of these differs for each group and can depend on the cost per person.
Given the ambiguity of this type of expense, it is worth discussing with your Tax Advisor.
When we prepare your BAS we will ask you a few relevant questions to be sure input tax credits are claimed in the correct way.
Until next time...
Leesa & Samantha
