Can I Claim Client Entertainment as a Business Expense in Australia?
Rarely — Australian businesses generally cannot deduct entertainment expenses (meals, drinks, recreation) under ITAA s32-5. Limited exceptions: FBT-paid entertainment, in-house cafeteria, or food provided in working overtime.
What Australian Taxation Office (ATO) says
Section 32-5 ITAA 1997 disallows entertainment expenses. Section 32-20 provides limited exceptions where Fringe Benefits Tax is paid on the entertainment, or the food is consumed in the course of working overtime, or in an in-house dining facility. GST input credits are also denied where the expense is not deductible.
When you can claim
- Light refreshments at staff meetings (sustenance, not entertainment)
- Food provided in working overtime (limited)
- Entertainment subject to FBT (taxed as benefit, then deductible)
- Entertainment provided in an in-house dining facility for staff
When you cannot claim
- Client lunches and dinners
- Tickets for sport, theatre, concerts with clients
- Drinks with prospects after work
- Christmas party entertainment outside specific FBT exemption thresholds
Good to know
Important: FBT-related entertainment is a complex area. The 'minor benefits' exemption (under A$300 per person, infrequent) can sometimes apply to client gifts but rarely to meals.
Stop guessing what you can claim in Australia
AccountsOS automatically categorises expenses with Australian Taxation Office (ATO)-aware rules and tells you exactly what is claimable.
Try Free