Private ruling: Entertainment and travel
Published: October 2014
Ruling period: Year ended 30 June 2014
Date scheme commenced: 1 July 2013

Ruling: Q1: Are you entitled to a deduction for the cost of meals for clients and travel to the restaurants? | A1: No.


Relevant legislative provisions: Income Tax Assessment Act 1997 Section 32-10

Reasons for decision: Summary: Section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997), allows a deduction for all losses and outgoings to the extent to which they are incurred in gaining or producing assessable income except where the outgoings are of a capital, private or domestic nature, or relate to the earning of exempt income. Under section 32-10 of the ITAA 1997, entertainment is defined as the provision of entertainment by way of food, drink or recreation and includes accommodation or travel where it is in connection with, or for the purpose of facilitating entertainment. Section 32-5 of the ITAA 1997 precludes a deduction for entertainment expenditure except in limited circumstances which are set out in Subdivision 32-B. Your circumstances do not fall into one of the exceptions. Therefore, you are not entitled to a deduction for the cost of entertainment. Furthermore, the cost of travel to the restaurant is considered to be private travel as it is considered that the travel is for the purpose of going to have a meal. This is so, even though you discuss or promote your club while having the meal.

Relevant facts: You are an employee and licensee of a club. | You travel to restaurants where you meet with your clients to promote the club. | You incur expenses to travel to the restaurants.