Is Food & Dinner Tax Deductible?

February 21, 2019

Is Food & Dinner Tax Deductible?

Did you know that costs associated with food and entertaining are specifically excluded from being a tax deductible expense? This is something that is coming up again and again. The general stance from Revenue is that people need to eat to stay alive, not to work. Any expenses incurred on food in the course of business is seen as dual purpose.

The general principle with deducting expenses in your business is that the expense should be wholly and exclusively for the purposes of the trade. This means expenses should only for business purposes.  This is clearly the case when buying stock for resale, paying for graphic design, marketing or accounting expenses etc.  Food is different.  Revenue takes the stance that people eat to live and not to work.  Therefore, money spent on food in the course of business activity is dual purpose.  In the scenario where a business owner must eat out on account of being away from home, the expenses incurred are still dual purpose and not an allowable deduction.

Exception – expenses incurred on food relating to a hotel stay

There is one exception to this rule! Where a business owner has gone on an overnight business trip and pays for food, then both the food and accommodation can be deducted for tax purposes. The trip cannot have any personal motive, this is the exception. Hotel stays which have any element of a personal motive must not be allowable for tax purposes.

Are client entertainment expenses tax deductible?

This leads to a further question around client entertainment; where a business owner incurs a genuine business expense while networking or on client entertainment.  This is also deemed dual purpose, so is not allowable for tax purposes.  This would include bringing a client out for coffee or a meal. On the surface this is a legitimate business expense but unfortunately not deductible for tax purposes.

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