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Food, Drink & Entertainment Expenses

Clients often ask what they can and cannot claim in relation to food, drink and other entertainment expenses and this area often tends to be confusing.  Due to this we see clients either claiming everything or nothing.

Claiming everything can leave you exposed to investigation with interest and penalties being imposed on overclaimed tax.  This concern often leads other clients to claim nothing thereby missing out on a genuine tax deduction they are entitled to.

The trick is to understand the basic principles and then have technology take care of the rest.  That way you can:-

  • save time on the books and tax filing,
  • ensure that you get all deductions allowed, and
  • remove the worries of getting things wrong.

We have released blogs in the past on entertainment related items such as Christmas gifts and parties for employees and also client gifts of food and drink.  These have been quite focused and so to answer a lot of the more general questions in this area we’d like to point you in the direction of the Inland Revenue guide to entertainment expenditure.  Just click on this link and download the guide.   It’s reasonably short and easy to consume with examples throughout.  Much of the technical stuff is contained between pages 4 and 17 which won’t take long for you to read through.

Our clients who use technology tend to get things right in this area.  This is largely because apps like Xero and Receipt Bank can be set up with bank rules to automatically identify expenses going through the bank account and split these for income tax and GST so that only 50% is claimed where necessary.  This makes their GST returns a breeze saving them a lot of time and also removes the worry of over claiming tax.

To aid matters further and remove the stresses associated with record keeping Xero Files can be used to retain a soft copy of those receipts picked up when meeting clients for a coffee.  Simply snap a photo on your phone and upload it through Xero Mobile App or claim it through as an expense.  You can then attach the invoice or receipt to the expense and never have to worry about searching for pieces of paper again.  Very handy should Inland Revenue ever come knocking.

Claiming food, drink and entertainment expenses does not have to be difficult.  If you need help to gain more time, earn more money or reduce worries then give us a call.

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