If you provide entertainment for your team, clients or any other business contact, some of your business entertainment expenses are tax deductible.
Please refer to our Entertainment Expenses Guide for a comprehensive guide to the tax treatment of entertainment expenses.
Fully deductible expenses
Entertainment expenses that are fully deductible may include:
- Meals while traveling on business
- Meal allowances
For a more comprehensive list of all fully deductible expenses, refer to our Entertainment Expenses Guide.
50% deductible entertainment expenses
Entertainment expenditure is limited to a 50% deduction if it falls within the following:
- Corporate Boxes
- Holiday Accommodation
- Pleasure Craft
- Food & Beverages consumed at any of the above or in other specific circumstances, for example:
- incidentally at any of the three types of entertainment above, eg, alcohol and food provided in a corporate box
- away from the taxpayer’s business premises, such as a business lunch at a restaurant
- on the taxpayer’s business premises at a party, reception, celebration meal, or other similar social function, such as a Christmas party for all staff, held on the business premises (excluding everyday meals provided at a staff cafeteria)
- at any event or function, on or away from your business premises for the purpose of staff morale or goodwill, such as a Friday night ‘shout’ at the pub
- in an area of the business premises reserved for use at the time by senior staff and not open to other staff, such as an executive dining room used to entertain clients
Entertainment expenses that are not deductible
There are some entertainment expenses that are not deductible. Where the expense is not related to generating income for your business, it will not be deductible.
There are a number of exemptions from these rules, please contact us if you are unsure, or refer to our Entertainment Expenses Guide or the IRD Entertainment Expenses (IR268) booklet for more information.