Can I claim a tax deduction for meetings in cafes?

By March 30, 2016 Start ups, Tax

CLAIMING FOR MEETING AT CAFES

Can you claim a tax deduction for the cost of holding a business meeting at a cafe? Sadly, the answer is no*

Businesses are able to provide light refreshments at meetings held on their business premises and claim a deduction for the cost of these refreshments (refer to IT 2675). This is because the ATO considers this not to be meal entertainment. What if you do not have a business premises to provide these refreshments? Can you take a client to your local cafe to buy the same refreshments and claim a deduction? Sadly, the answer is no.

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The ATO considers any meal & drink consumed at a cafe to take on the character of entertainment. Why? To quote the ATO directly: “The food or drink may not provide entertainment in itself depending on the extent of the meal, but it is the setting in which it is consumed that turns the food or drink into the provision of entertainment. That is, entertainment is provided by way of food or drink, in a social situation at a cafe, despite business discussions taking place.”

What if you do not have a space suitable, or any space at all, to hold meetings? The ATO went on to say: “The fact that there are limited facilities at your business premises for meeting clients does not change the character of entertainment by way of food or drink. This is also the case where there are no business premises.”

*Please note the above was largely referring to a Private Ruling obtained in relation to a sole trader, however the general principles will apply to all taxpayers. The bottom line is that if you provide refreshments at a cafe for clients their component will not be deductible. Anything provided to employees at a cafe will be considered meal entertainment and will fall under Fringe Benefits Tax legislation.


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As always, the above is to be used as a guide only and if you have any questions specific to your situation, please get in touch.