Seminar Expense for Food and Entertainment.

Some common sense has returned to the rules regarding meals consumed during an overseas seminar.

Try and understand this one!

There was an April 2003 Federal Court decision that disallowed meals expenses, because they amounted to the provision of ??entertainment by way of food drink or recreation??. The taxpayer in the case was Amway, and the disallowed meals occurred during an offshore conference of Amway distributors.

Now, on 12 October 2004, the Full Federal Court has reversed the decision of the lower court, and decided that the meals were not entertainment - with the exception that a gala dinner was intended to provide entertainment, and its costs remained non-deductible.

The fact that this simple question has taken so many hours of senior legal debate (and amazing legal cost) illustrates just how extraordinarily difficult it is to be sure about Australia's tax laws.

The simplistic view is that if the overseas trip is a ??junket?? with little business content, then a claim for the meals and travel and accommodation will not be justified; whilst if the business content is significant, the claim is allowable.

In Amway??s situation the disputed costs of $800,000 were significant - significant enough for the Australian Tax Office to take issue.

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