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Business income tax
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Claiming business expenses: Entertainment expenses

Entertainment expenses

Important - GST rate change affecting time of supply  

For the 2010-11 tax year, GST-registered persons have the option of using:

  • the normal time of supply rule to account for entertainment expenditure incurred before 1 October 2010 at the GST rate of 12.5%, or
  • the date the registered person files their income tax return for the 2010-11 tax year and GST rate of 15%.

Example: Diana wants to claim entertainment expenses for the 2010-11 year. She has identified all the expenses that occurred before 1 October 2010 and those that occurred for the rest of the year. Diana makes an adjustment for the GST in the return period which covers her corresponding income tax return due or filed date whichever occurs earliest.

Alternatively, Diana could have just made an adjustment based on a GST rate of 15% for all the expenses and included this on the GST return period which covers her corresponding income tax return due or filed date whichever occurs earliest.

  • If you provide entertainment for staff or clients, some of these business entertainment expenses are tax deductible.
  • Some examples of fully deductible entertainment expenses are food and drink:
    • while travelling on business
    • at promotions open to the public
    • at certain conferences.
  • Some other entertainment expenses are only 50% deductible. See our booklet Entertainment expenses (IR268) for more information.
  • To support your claims for business entertainment expenses you should keep invoices and receipts.