Hi all,
I get that entertainment expenses are not tax deductible, but are they allowable? Can I put them through the business account to entertainment expenses and then just not claim GST or tax deduction? Or does it have to go to director personal drawings if we do not want to pay FBT?
For example a lavish client dinner that landed us a new contract?
Thank you
Hi @TMarie
While we give advice on what deductions a business can claim for expenses, we don't give advice (or restrict) on what expenses a business can pay for in general. There may also be ASIC restrictions on the entity if it is a company. And if it is a company, keep in mind that retained income in a company is still taxed, even if that income was spent on non-deductible expenses.
There won't be FBT obligations where the benefits are not given to the director or employees. However, if the director receives benefits (such as attending the dinner and receiving a meal) the director's portion will be a fringe benefit. You can claim an income tax deduction for this, and the FBT return will account for it instead.
You can read about fringe benefits tax on our website.
Hi @TMarie
While we give advice on what deductions a business can claim for expenses, we don't give advice (or restrict) on what expenses a business can pay for in general. There may also be ASIC restrictions on the entity if it is a company. And if it is a company, keep in mind that retained income in a company is still taxed, even if that income was spent on non-deductible expenses.
There won't be FBT obligations where the benefits are not given to the director or employees. However, if the director receives benefits (such as attending the dinner and receiving a meal) the director's portion will be a fringe benefit. You can claim an income tax deduction for this, and the FBT return will account for it instead.
You can read about fringe benefits tax on our website.
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