Hospitality business expenses in Australia: the complete guide for cafes, restaurants, pubs and caterers

Running a cafe, restaurant, pub, bar or catering business in Australia means carrying a long list of costs with very different tax treatments: food stock that is GST-free when you buy it and taxable when you sell it, wages with super and withholding attached, meals you give staff that may or may not trigger FBT, a liquor licence, platform commissions, card fees, kitchen equipment, rent and the rest. This guide goes through the whole ledger, category by category, and states for each one whether the cost is deductible, what happens with GST, and where the ATO draws the lines that catch operators out. Every figure is sourced to the ATO in the Sources section, retrieved 10 October 2026.

What this guide covers: food and beverage stock, GST on what you sell (including tips and surcharges), wages, super and payroll, staff meals, functions and the FBT boundary, client entertainment, rent, outgoings and utilities, licences, permits and fines, delivery platforms, POS, booking and payment fees, kitchen equipment, fit-out and repairs, uniforms, laundry and cleaning, vehicles and travel, marketing, insurance and bank costs, and the records, BAS and year-end work that tie it together.

The hospitality ledger at a glance

The rest of this guide walks through each row, and every section opens with its verdict.

Where ExpenseFlow fits

A venue’s purchase ledger is high volume and low value: produce, meat, dairy, beverages, packaging, cleaning supplies, linen, gas bottles, often several invoices a day across a dozen suppliers. ExpenseFlow captures each supplier invoice and receipt (email forward, upload or phone), reads the line items and the GST per line, codes each line to your chart of accounts with a written reason, and routes anything uncertain to a person before it posts. For Australian venues the checks that matter most are built in: a line that reads as basic food but carries 10% GST is flagged so the credit is not over-claimed; bank fees coded with GST are flagged as input taxed while merchant and terminal fees keep their GST; residential rent coded as taxable is flagged; a document over $82.50 with no ABN is flagged; the line-level GST is recomputed against the printed totals; and a line that reads as entertaining (a client dinner, a staff function) is flagged for an FBT decision rather than silently coded as a deductible meal. After approval the bill syncs to Xero with the source document attached and the decision trail written to the bill’s history, or to QuickBooks Online as a coded bill.

What it does not do: it does not run payroll or calculate super, it does not compute FBT or decide for you whether a staff event is exempt, it does not count stock, it does not touch the sales side of your POS, and it does not lodge your BAS. Those stay with you and your accountant. What it removes is the keying, the GST mis-coding and the lost paperwork behind a busy supplier ledger. The matching hospitality chart of accounts for Xero and for QuickBooks give you account names that line up with the categories below.

The ExpenseFlow for hospitality businesses page covers these checks across all five countries.

Food and beverage stock

Ingredients are trading stock. Buying them is a deductible operating expense (the ATO lists purchases of trading stock, including delivery charges, among ordinary operating expenses ^[10] ), and the GST on the purchase depends entirely on what the item is. Basic food is GST-free: raw, fresh or frozen meat (except prepared meals), bread and bread rolls without a sweet filling or coating, cooking ingredients such as flour, sugar and baking mixes, unflavoured milk, cream, cheese and eggs, spices, seasonings and condiments, plain non-carbonated water and juice with at least 90% fruit or vegetable content ^[6] . Prepared food, bakery items with a sweet filling or icing, biscuits, confectionery, soft drinks and every alcoholic beverage are taxable ^[5] . So a single produce or wholesaler invoice routinely mixes GST-free and taxable lines, and the credit is only claimable on the taxable ones.

Two stock rules save hospitality operators time at year end. First, if your aggregated turnover is under $10 million and you reasonably estimate that the value of your stock on hand changed by $5,000 or less across the year, the simplified trading stock rules let you skip a formal stocktake and ignore the change in your return ^[14] . For a cafe whose fridge and dry store sit at roughly the same level every June, that is most years. Second, wastage and spoilage need no separate deduction: stock that was thrown out was never in closing stock, so it is already in cost of goods sold. What you do need is a record of what was written off, so the shrinkage in the stock figure can be explained if asked.

GST on what you sell, tips and surcharges

A restaurant is not a grocer. All food and beverages for consumption on the premises from which they are supplied are taxable, and so are all takeaway hot food and beverages ^[5] . The ATO’s own example makes the point: a bread roll is GST-free on the bakery shelf and taxable the moment it is consumed in a restaurant ^[6] . Cold takeaway follows the food’s own classification, which is why a cafe that sells a GST-free loaf over the counter and a taxable toasted sandwich at the table has to classify every POS item correctly rather than apply 10% across the board. The sales side flows to your BAS; the Australian GST and BAS guide and the BAS lodgment guide cover the return itself.

Tips have their own rule. A genuinely voluntary tip that the venue passes on to the staff who provided the service is not consideration for the meal, so it is not part of your taxable sales, provided you keep records showing the tips went to employees and not into takings ^[7] . If tips are retained by the business, they become consideration and GST applies. A pre-set service charge, a public holiday surcharge or any amount the customer cannot decline is part of the price of the meal and carries GST ^[7] . Tips received by staff are their own assessable income, not yours ^[23] .

Wages, super and payroll

Wages are the largest line in most venues and the most heavily regulated. You can generally claim the salaries and wages you pay employees, and the super contributions you make on time to a complying fund, as operating expenses ^[8] . The condition the ATO attaches is compliance: to deduct a payment to a worker you must first meet the PAYG withholding and reporting obligations for that payment, which in practice means Single Touch Payroll reporting on every pay run ^[8] . Pay in cash off the books and the deduction is gone along with the compliance.

The super guarantee rate is 12% for the year starting 1 July 2025 and for later years ^[9] . From 1 July 2026 Payday Super applies: employers must pay super guarantee for each payday rather than quarterly, and the super guarantee charge payable on late amounts becomes deductible, though penalties and interest after an assessment are not ^{[8] [9]} . Two hospitality specifics sit on top: award penalty rates for evenings, weekends and public holidays are ordinary wages and deductible like the rest, and once total wages pass your state’s threshold, state payroll tax applies as a further business cost. Contractors you engage, such as a casual kitchen hand on an ABN or a cleaning company, are deductible as paid, but check that they are genuinely contractors rather than employees, because the super and withholding obligations follow the real relationship.

Staff meals, functions and the FBT boundary

Feeding your own people is where hospitality tax gets specific. Food or drink provided to, and consumed by, current employees on your business premises on a working day is exempt from FBT ^[3] . The staff meal before service, the coffee during the shift, the pizzas at the end of a Saturday night: no FBT, and because the cost is an ordinary employment expense it is deductible with its GST credit. The exemption does not extend to employees’ partners or families, and a function room you hire is not your business premises ^[3] .

Move the food off-site or outside work time and the entertainment question arrives. The ATO weighs four factors: why the food is provided (so staff can get through the day, or so they can enjoy themselves), what is provided (light refreshments without alcohol, or an elaborate meal with alcohol), when (during work time or while travelling for work, or outside it) and where (on your premises, or at a restaurant, hotel or function room) ^[2] . The more the answers lean social, elaborate, after hours and off-site, the more clearly it is entertainment.

Entertainment provided to employees is a fringe benefit unless an exemption applies. A party off your premises, or one that includes partners, is exempt as a minor benefit when the cost per person is less than $300 and it would be unreasonable to treat it as a fringe benefit; the same $300 test covers gifts to staff ^[4] . The catch is the mirror image of the exemption: where the function is not subject to FBT, you cannot claim an income tax deduction for its cost ^[4] . Where entertainment provided to employees is a fringe benefit and FBT is paid, you can generally claim the income tax deduction and the GST credits; exempt benefits do not qualify because they are not fringe benefits ^[1] . For a venue, the practical reading is: staff meals on the floor during shifts are the easy case, staff functions elsewhere are a choice between paying FBT and keeping the deduction or using the minor benefit exemption and forgoing it, and the decision should be recorded at the time, not reconstructed in March.

Client entertainment

Taking a prospective corporate client, a supplier rep or a reviewer to a long lunch is entertainment provided to people other than employees. It is not subject to FBT and is generally not income tax deductible ^[1] , and the GST law follows: an acquisition is not a creditable acquisition to the extent it is a non-deductible entertainment expense, so there is no GST credit either ^[19] . The cost sits in a non-deductible entertainment account and stays out of the BAS. The business meals in Australia guide covers the finer cases, including travel meals, which are not entertainment when an employee is away overnight for work.

Rent, outgoings and utilities

Premises costs are deductible operating expenses: renting or leasing business premises, electricity, gas, water, landline and mobile phone, internet, cloud storage, council rates and land tax all appear on the ATO’s list ^[10] . On the GST side, commercial rent and utilities from a registered supplier carry 10% GST and the credit is claimed from the landlord’s or retailer’s tax invoice ^[17] , while council rates, water rates and land tax are government charges with no GST ^[21] , so coding them as taxable over-claims the credit. A lease bond or security deposit is not an expense at all until it is forfeited; it sits as an asset while the landlord holds it. Make-good obligations at the end of a lease are usually capital, treated with the fit-out they reverse.

Licences, permits and fines

Venues pay a stack of recurring regulatory charges: the annual liquor licence fee, council food business registration, outdoor dining permits, music licensing through OneMusic Australia, gaming machine fees where they apply. Annual fees charged by statutory bodies are deductible ^[10] , and fees for a licence or permission under an Australian law are outside GST ^[22] . Penalties and fines imposed under an Australian law are not deductible, and the ATO notes that late payment fees are usually penalties ^[10] , so a late liquor licence renewal penalty or a food safety fine is a cost with no tax relief. Paying a premium to acquire an existing licence from another operator is a different thing again: it is a capital outlay for an intangible asset, not a running cost, and whether and how it can be written off is a question for your accountant rather than a line in the monthly expenses ^[13] .

Delivery platforms, POS, booking and payment fees

Delivery platform commissions, online ordering fees, booking system subscriptions, rostering and POS software, and the hire of EFTPOS terminals are all ordinary costs of earning the venue’s income; subscription fees for off-the-shelf software appear on the ATO’s operating expenses list ^[10] . The GST point is the one that trips people up. You can only claim a credit for GST that was actually included in the price, and for purchases over $82.50 you need a tax invoice from a GST-registered supplier ^[17] . Some platforms invoice from an Australian entity and charge GST, some charge from offshore, and the monthly statement is the only reliable guide. Code the GST the statement shows, not the GST you assume.

Payment fees split in two. Bank account-keeping fees, dishonour fees and loan or overdraft interest are financial supplies: input taxed, no GST in the price, no credit to claim ^{[15] [16]} . Card merchant service fees and terminal rental are a different supply; the acquirer’s monthly merchant statement normally shows GST, and that statement is your tax invoice for the credit ^[17] . Mixing the two, usually by coding a merchant fee as input taxed or a bank fee with GST, is the most common fee error in hospitality books.

Kitchen equipment, fit-out and repairs

Commercial ovens, fridges, cool rooms, coffee machines, dishwashers, furniture and point-of-sale hardware are depreciating assets, claimed over time rather than when paid ^[13] . The small business concession changes the timing. If your aggregated turnover is under $10 million and you use the simplified depreciation rules, you can immediately deduct the business portion of each asset that costs less than $20,000, new or second-hand, in the year it is first used or installed ready for use ^[11] . The limit applies per asset, so a $12,000 oven and a $9,000 fridge bought in the same month are both written off in full; the ATO’s current table shows the $20,000 limit for assets first used or installed on or after 1 July 2023, with no end date listed ^[11] . Assets at or above the limit go into the small business pool. The equipment claims guide covers the pool rates and the records.

Repairs are deductible when they restore something to its original state, such as fixing defects or renewing parts ^[12] . Two things that look like repairs are capital: substantial improvements, such as installing a new ceiling or re-plumbing a kitchen, and repairs made immediately after you buy an asset, because the price you paid reflected its condition ^[12] . A full fit-out of a new site is capital through and through and is claimed through depreciation or capital works, and the cost of setting up the business itself can be claimed over five years ^[13] .

Uniforms, laundry, cleaning and pest control

Uniforms the venue supplies, and the cost of laundering them, are deductible: the ATO’s operating expenses list includes clothing expenses for corporate wardrobes, uniforms and occupation-specific and protective clothing ^[10] . Staff who buy their own have narrower rules: an employee can claim a compulsory uniform, a registered non-compulsory uniform, occupation-specific clothing such as a chef’s checked pants, and protective items such as non-slip kitchen shoes, but not conventional black trousers and a white shirt even if you insist on them, and laundry claims of $150 or less need no written evidence ^[18] . Cleaning contracts, pest control, grease trap servicing, waste removal and recycling are ordinary deductible costs; waste removal and recycling appear on the ATO’s list by name ^[10] .

Vehicles, delivery and travel

A catering van or a delivery vehicle is claimed either by logbook or, for a sole trader or partnership with an individual partner, by the cents per kilometre method capped at 5,000 business kilometres per car per year ^[20] . A vehicle that doubles as the owner’s private car needs a logbook to support the business-use percentage. The vehicle and travel guides give the current rate and the records, and the travel allowance cheat sheet covers staff sent interstate for a function.

Marketing, insurance, bank costs and the small stuff

Advertising and sponsorship, public relations, insurance premiums (fire, burglary, public liability, workers compensation, loss of profits), interest on money borrowed for the business, bank fees and charges, parking fees (not fines), transport and freight, and small-value items costing $100 or less are all on the ATO’s list of deductible operating expenses ^[10] . Website running costs and domain renewals are deductible as incurred ^[13] . Claim the GST that each invoice shows: advertising, software and insurance bills usually carry it, while interest and bank fees do not ^[15] .

Records, the BAS and year end

Three thresholds govern the paperwork. For purchases over $82.50 you need a tax invoice to claim the GST credit, and the supplier must be registered for GST; unclaimed credits can be picked up for four years ^[17] . Business records, including the tax invoices behind every credit, are kept for five years, which the record-keeping guide sets out. The BAS cycle and due dates are in the tax deadlines calendar, and the year-end checklist covers the stocktake decision, the FBT return, and the super contributions you want deducted this year, since contributions are deductible when paid on time rather than when accrued ^[8] .

Common mistakes

• Claiming GST credits across a whole produce invoice when half the lines are GST-free basic food ^[6] .
• Charging no GST on dine-in or hot takeaway food because the ingredient was GST-free ^[5] .
• Treating voluntary tips as sales, or treating a compulsory surcharge as a tip ^[7] .
• Paying wages without PAYG withholding and STP reporting, which forfeits the deduction ^[8] .
• Claiming a deduction for a staff Christmas party that was FBT-exempt as a minor benefit ^[4] .
• Claiming client lunches as deductible meals, with GST credits attached ^{[1] [19]} .
• Coding council rates, land tax or the liquor licence fee with 10% GST ^[10] .
• Coding merchant fees as input taxed, or bank account fees with GST ^{[15] [17]} .
• Depreciating a $9,000 fridge over several years instead of writing it off ^[11] .
• Expensing a new kitchen fit-out or a post-purchase overhaul as repairs ^[12] .
• Claiming staff members’ conventional black-and-white workwear as uniforms ^[18] .
• Claiming GST credits without a tax invoice on purchases over $82.50 ^[17] .