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Entertainment Expenses - what is tax deductible?

Updated: Oct 30


Entertainment Expenses - what is tax deductible?
Some entertainment expenses are 50% deductible, whereas others are 100% tax deductible.

The below table summarises some common examples of entertainment expenses and whether they are 50% or 100% deductible.


*Always seek specialist advice that is tailored to your situation and risks.


The table can also be downloaded as a pdf:




Example Entertainment Expense

50% deductible

100% deductible

Friday night drinks for team members or clients in the office

✅


Friday night drinks for team members or clients in the pub

✅

Hire of a launch to entertain clients

✅


Restaurants providing food & drinks to team members at a social function in their restaurant

✅


Sponsoring local sports teams and receiving tickets to their corporate box in return. 50% of the value of the tickets would be deducted from total sponsorship

✅


Sponsoring a sports team by providing a meal for the team at their grounds after each game

✅


Sponsoring a local sports team


✅

Staff Christmas Party on or off the business premises

✅


Taking a client out to dinner while you are out of town on business - but still in New Zealand

✅


Taking a client out to dinner

✅


Holiday accommodation - holiday home, timeshare apartment or a similar leisure venue unless merely incidental to business activities or employment duties

✅


Giving a client a gift of a bottle of wine or other beverage

✅


Giving a client a gift of food, such as chocolates and cake at Christmas

✅


Giving a client a gift hamper of food & beverage items

✅


Giving a client a gift hamper containing food/beverage items (50% deductible) and non-edible items (100% deductible)

✅

✅

Giving a client a gift of a restaurant voucher

✅


Providing a meal for a journalist while reviewing your business for their article


✅

Providing morning / afternoon tea for your team


✅

Sandwiches provided at a lunchtime meeting of supervisors


✅

Taking a client out to dinner whilst you are on business overseas


✅

Entertainment which is merely an incidental part of a trade display mainly help to advertise or promote the business


✅

Dinner for Sales Representatives whilst out of town selling with no client present


✅

Donating food to a Christmas Party in a children's hospital


✅

Employee's salary package includes a taxable allowance for entertaining clients


✅

Golf club subscription for business owner paid by company


✅

Gym membership for staff member paid by employer


✅

Giving a client tickets to a sports game, concert, show or other recreational event (excluding corporate box entertaining)


✅

Giving a client a gift voucher, e.g. a Prezzy card


✅

Giving a client a gift, which is not related to food or beverages


✅


GST on Entertainment Expenses

In addition to some entertainment cost not being deductible, the GST component is also not claimable.


Fringe Benefit Tax & Entertainment Expenses

An entertainment expense where the benefits are enjoyed or received by employees may be subject to FBT.

If it's a business-related entertainment expense which is only 50% deductible, it is not subject to FBT, however, there is an exception.


FBT will be payable if the employer provides the 50% deductible entertainment and:

  • the employee can choose when and where to enjoy the benefit, or

  • the benefit is enjoyed outside of New Zealand, and

  • the benefit is not provided in the course of, or

as a necessary consequence of, the employee's employment duties.


Disclaimer

This article is for informational purposes only and should not replace specific tax advice. For

personalised advice please contact us.


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