ENTERTAINMENT EXPENSES

Often when completing small business accounts we find people confused about what they can claim for Entertainment Expenses.

 

The number 1 Rule is the expense needs to be related to your business i.e. linked to earning your income.

 

For most small businesses the majority of entertainment expenses are only 50% deductible. Examples of these are:

  • Food and drink, including meetings with clients or staff
  • Friday night drinks for staff
  • Lunchtime food shout to staff
  • Christmas party for staff

The exception to this is food and drink while travelling out of town on business, which is 100% deductible.

IRD expects you to keep records of:

  • The date the expense was incurred (bill/receipt)
  • The names of people entertained and the business they represent
  • The reason for the entertainment