Quick answer
In Australia the key question is whether a meal is entertainment. Entertaining clients or staff at a restaurant is generally not deductible and the GST credit is blocked. Light working meals that merely sustain you, and meals while you are travelling overnight for work, are deductible. Meal entertainment provided to staff can instead be brought into the fringe benefits tax system.
Are business meals tax deductible in Australia?
The answer turns on the entertainment rules, which are stricter in Australia than in many countries. The ATO treats most restaurant meals and social food and drink as meal entertainment. Entertainment is generally not deductible for income tax, and the GST credit is specifically blocked under Division 69 of the GST Act. This applies whether you are entertaining a client or your own staff.
Two categories sit outside the entertainment block. Sustenance is food and drink that simply keeps you going at work, such as sandwiches provided at an on-site working lunch or a meal during overtime; this is usually deductible. Travel meals, bought because you are away from home overnight for work, are deductible and are not entertainment. When in doubt, the conservative default for Australia is to treat a restaurant or social meal as blocked entertainment. See the Australian expense rules for how this interacts with FBT.
How much can you claim?
There is no per-meal cap; the question is the category. A blocked entertainment meal gives no deduction and no GST credit. A deductible working meal or travel meal is claimed in full with a GST credit where you hold a tax invoice.
Where employee meal entertainment is brought into the FBT system, the position flips: once FBT is paid on the benefit, the meal becomes income tax deductible and the GST credit becomes available. Employers commonly use the 50-50 split method or a 12-week register to value meal entertainment for FBT.
Worked example. You take a client to dinner for $220 including $20 GST. None of it is deductible and the $20 GST credit is blocked. Separately, your team works late on a deadline and you buy $80 of pizzas as an overtime meal; that is sustenance, so it is deductible and you claim the GST credit on the tax invoice.
Record-keeping requirements
Keep the tax invoice for every meal, and note who attended and the business reason. The attendee note is what lets you defend a travel-meal or sustenance claim and separate it from entertainment. For meals while travelling, keep a travel diary if you are away six or more consecutive nights. The ATO requires records to be kept for five years.
How to claim, step by step
- At capture, classify the meal as entertainment, sustenance, or a travel meal.
- For entertainment, claim no deduction and no GST credit, unless it is being brought into FBT.
- For sustenance and travel meals, code them to the right account and claim the GST credit on the tax invoice.
- For employee meal entertainment, decide whether to apply an FBT valuation method, which then unlocks the deduction and GST credit.
- Attach the tax invoice and the attendee note to each transaction.
- Keep a travel diary for trips of six or more nights and retain records for five years.
Common mistakes
- Claiming a standard 10% GST credit on entertainment meals. The credit is blocked.
- Treating a client restaurant dinner as a normal deductible expense.
- Confusing sustenance with entertainment, which forfeits a valid working-meal deduction.
- Ignoring the FBT angle on staff meal entertainment, which is where the deduction can be recovered.
- Losing the tax invoice, without which no GST credit is claimable above $82.50.
Software that helps
The entertainment-versus-sustenance call has to be made at capture, because it cannot be reconstructed from a bank line months later.
- Dext prompts for an attendee note and category as receipts are scanned.
- ExpenseFlow reads the receipt, applies the correct GST treatment, and flags restaurant and social meals that look like blocked entertainment rather than deductible sustenance, then syncs the coded transaction to Xero.
- Weel ties card spend to a category prompt so meals are coded when the card is tapped.
FAQ
See the answered questions above for entertainment versus sustenance, GST on client meals, the FBT angle, and travel meals.