Entertainment means entertainment by way of food, drink, recreation or transport and any accommodation or travel in connection with that provision. Examples include a staff party or taking a client out for drinks and a meal. You will notice that Tyro Accounting gives you the option to categorise a transaction as either a deductible or non-deductible entertainment expense. Generally, entertainment expenses are not deductible for income tax purposes even if they are incurred as part of running your business. However, there are exceptions to this. For example, having a meal while travelling on a business trip to visit a client or providing refreshments during a business presentation could be tax deductible. These could be classed as sustenance, not entertainment. Another situation where an expense is deductible is if the entertainment is provided by way of a fringe benefit to employees and you are liable to pay Fringe Benefits Tax. There are also possible exceptions for entertainment at seminars that last for at least 4 hours and entertainment as part of promotion and advertising activities (as long as the entertainment is equally available to ordinary members of the public rather than specific individuals). This is a highly complex subject and we would advise you to take advice from an accountant if you are unsure about whether your entertainment expense is tax-deductible.