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:

Entertainment Expenses

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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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