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Christmas Parties and the Taxman

November 18th, 2011 | Posted by Wendy Simpson-Fox in Accountant in Auckland | Chartered Accountant Auckland | Claiming Business expenses

Looks suspiciously like the Boutique Financial catNot a pleasant thought is it …. inviting the Taxman to boogie down at your Christmas party but it’d certainly help with keeping the drinks bill down.   With that in mind, we thought we’d give you the lowdown on exactly what business food and drink you can get away with claiming this Christmas and all year round in fact.

First up (and because it’s a very short list sadly) here’s what you can claim in full:

100% Deductible Entertainment

  1. Biscuits, tea, coffee & milk for staff tea breaks at work.
  2. Staff overtime meals when they’ve worked more than two hours overtime and there’s an entitlement in their employment contract.
  3. Light working lunches, for select employees, in a senior meeting room for example.
  4. Food or drink at a promotional event which you’ve opened up to the public.
  5. Meals at training courses & conferences where the training part lasts more than four hours.
  6. Meals while travelling overseas or out of town on business (but watch out because if you’re paying for someone else, even a client, then it’s only half deductible!)

50% Deductible Entertainment

Rediculously you can generally only claim 50% of all your other business food and drink,  which we feel is completely unfair and essentially means that you’ll only get a tax deduction for half the cost of your Christmas party.  Another slap in the face is that any gifts, generously made to your customers of alcohol or foodie treats (including lollies, chocolate or those revolting Chutneys that no one ever eats) will also only be 50% deductible along with the following sorts of things:

  1. Client or Staff drinks at work.
  2. Gift Vouchers for food or drink.
  3. Coffee at a Cafe with a client or a potential client.
  4. Business lunch or dinner at a restaurant with a client, employee, or a fellow shareholder/director.

On the positive, you don’t need to get yourself into a sticky mess trying to do the 50% calculations because we’ll take care of them for you when we lovingly prepare your annual accounts at the end of each financial year.  Your annual entertainment is just one of the many things that’s included in our worry-free base price of $750 for company annual financial statements by Boutique Financial Chartered Accountants in Auckland.

Disclaimer: This publication has been carefully prepared but it has been written in general terms only. The publication should not be relied upon to provide specific information without also obtaining appropriate professional advice after detailed examination of your particular situation. This article must be read in accordance with our disclaimer and terms of engagement and unauthorized reproduction of this article is prohibited.

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