Are meal expenses tax deductible?

Did you know that the income tax and GST treatment of meal expenses differs if you’re self-employed compared to being an employee? It’s different again under the entertainment expenditure rules.

Self-employed

If you’re self-employed, usually you can’t deduct meal expenses as they are deemed a private or domestic expense, although in certain situations there may be some exceptions. However, an extra expense may be deductible where you are required to work in a remote location or unusual hours. It’s not enough to just be ‘working away’, you must have no choice but to incur additional expenses for meals. That cost, above normal meal expenses, is deductible.

Employees

If you’re an employee, meal expenses are deductible when it’s a straightforward reimbursement for out-of-pocket work-related expenses. The amount is tax deductible when you require an employee to work away from their workplace, to travel for work, attend a business meeting, conference or training course, or perform overtime.

Claiming GST

Whether you can claim GST on the meal(s), is based on how the income tax was treated. If you can’t deduct expenses for income tax purposes, you can’t claim GST on the expense. If you can deduct the expense for income tax purposes and you’re GST registered, then you can claim the GST on the expense.

Entertainment Expenses

Where it can get more complicated is entertainment expense rules. These rules don’t distinguish between types of business entities but instead on the type of entertainment and the connection between the expense and business income. If you’re self-employed and incur meal expenses that are classed as entertainment expenditure, you can deduct 50% of the cost, including the cost of your meal.

Need some help?

We can help you figure out whether business meal expenses are tax deductible with advice for your specific situation. Get in touch to discuss any questions you may have on this.