Deduction for light lunches consumed by the Directors and Owner on the Business Premises are deductible and should be coded to Staff Amenities.
CCH Research Digest:
The ATO’s Ruling considers the deductibility of morning and afternoon teas and light meals and whether a boardroom with kitchen facilities is an “in-house dining facility”.
According to the Commissioner, the provision of morning tea to employees (and associates of employees) during the working day is not the provision of entertainment and in most cases, is deductibile. Morning and afternoon tea includes light refreshments such as tea, coffee, fruit drinks, cakes and biscuits etc. but does not include alcohol. Light meals are treated in the same way as morning and afternoon teas, but as “light”refreshments become more elaborate, they take on the characteristics of entertainment. The provision of morning and afternoon tea and light meals is an allowable deduction (classed as an exempt finge benefit).
The Commissioner also states that a boardroom or meeting room with kitchen facilities is not an allowable “in-house dining facility”. Therefore, the costs incurred in providing substantial meals to employees in these rooms are not allowable deuctions.
Example:
- Two Directors work in the business and spend $30 per day on a light lunch with no alcohol
- Over a 45 week period this equals $6,750
- Assume that the Taxpayers are on the highest marginal rate 46.5%
- They would need to earn $12,618 in income per annum and pay $5,686 of tax each year to have in their hands the sum of $6,750 to purchase their lunch
- Tax savings using this example $5,868 per annum
- Assume they work for 20 years in the same business = $117,360 in tax savings
