Meal Expenses in NZ: What’s 100%, 50%, & Not Deductible?

If you’re self-employed or a business owner, you may be able to claim meal expenses – but be careful.

The IRD doesn’t treat all meal costs equally. And meal expenses are one of the most misunderstood deductions in business.

Some meals can be claimed 100%. Others are only 50%. Many are not deductible at all, even if paid through your company.

The deductibility depends on the purpose, the setting, and the structure of your business.

If you don’t understand the rules, your claim could range from 100%… to 0%.

In this article, I’ll break down:

• 11 ways where meal costs can be 100% deductible
• 5 situations where you can only claim 50%
• 4 examples of meals that are not deductible at all
• 6 common mistakes that can get you in trouble with IRD

Whether you’re self-employed, run your business through a company, or operate as a shareholder-employee, this article will help you:

• understand how different structures change the rules
• what you can and can’t claim
• and figure out what to do if you’re still unsure at the end

Why Is There So Much Confusion?

Let me go on a rant first.

IRD has done done a brilliant job of making meal deductibility… complicated.

Outcomes vary depending on whether you are:

• self-employed (e.g. sole trader, partner, LTC owner)
• an employee or shareholder employee,
• using a look-through company (LTC),
• or claiming a meal that’s classified as entertainment.

The tax treatment also depends on:

• whether the cost is a meal or a light refreshment
• whether it’s an allowance, reimbursement or fringe benefit,
• and whether it happens at work, offsite or while travelling.

And don’t get me started on whether it’s a business meeting, a social event or a public promotion.

Basically, under New Zealand’s Income Tax Act 2007, deductions for private or domestic expenditure are generally denied, and food is usually considered private.

If you’re self-employed, this means you generally can’t claim the cost of your own meals — even when working away from home. For example, buying yourself a coffee or lunch between meetings is a personal living expense, not a business deduction. A narrow exception exists only when your business imposes additional costs — like working in a remote location or at unusual hours with no affordable alternatives. Even then, you can only claim the portion above your usual cost (e.g. if your normal dinner costs $20 and you’re forced to spend $35, only the $15 difference may be deductible).

Using a look-through company (LTC) or partnership doesn’t change this — IRD still treats the expense as yours personally. The self-employed limitation applies.

However, if you operate through a company and treat yourself as an employee (with an employment agreement and salary), the treatment is different. The company can deduct the cost and the allowance may be tax-free to you as a shareholder-employee — provided it meets the criteria for travel, overtime, or work duties. Just having a company pay your meals isn’t enough — you must be treated as a genuine employee.

Now that we’ve got that off our chest, let’s dive into the practical part…

Because there are legitimate ways to claim meal expenses if you understand how the rules work.

11 Ways Meal Expenses are 100% Deductible

Let’s discuss the 11 most common scenarios where meal expenses are fully claimable – because they are genuinely work-related with no significant private or entertainment benefit.

1. Meals During Work-Related Travel – Employees Only [100% Deductible]

Meal costs are fully deductible if an employee or shareholder-employee is travelling away from their normal workplace — typically overnight or long-distance. The meal must be for sustenance, not entertainment or a celebration. The cost must be paid or reimbursed by the employer.

These travel-related meals are tax-free to the employee, but only for up to 3 months of continuous work in the same location. Once an employee has worked in the same distant location for more than 3 continuous months, any further meal allowances become taxable income to them and must go through PAYE. The employer can still deduct the cost, but it’s no longer tax-free to the employee.

Also note: If the travel includes entertainment (e.g. dinner with a client while out of town), only 50% is deductible under the entertainment rules.

2. Overtime Meal Allowances – Employees & Shareholder-Employees [100% Deductible]

Employers can pay or reimburse a meal when an employee works overtime — beyond their normal hours — and the cost is 100% deductible. The employee does not pay tax on the allowance, provided it’s occasional, reasonable, and connected to the employee performing duties outside their usual hours.

This exemption also applies to shareholder-employees, as long as they are acting in their role as an employee of the company and the allowance is tied to extra work duties.

These allowances are generally exempt from PAYE and not subject to fringe benefit tax (FBT) when properly documented. However, providing meals offsite or as vouchers without following IRD’s criteria may trigger FBT.

3. Light Refreshments at Work [100% Deductible]

Meal costs are fully deductible if an employee or shareholder-employee is travelling away from their normal workplace — typically overnight or long-distance. The meal must be for sustenance, not entertainment or a celebration. The cost must be paid or reimbursed by the employer.

4. Light Refreshments Offsite – Employees Only [100% Deductible]

Light drinks or snacks (e.g. coffee, tea, biscuits) provided to employees working offsite are 100% deductible. This applies when the food is replacing what would normally be provided at the office.

However, full meals provided offsite (not during overnight travel or genuine conferences) are not automatically deductible. An allowance for a coffee while visiting a client is fine. Covering lunch each time staff leave the office? That’s likely entertainment or private consumption.

5. Meals at Conferences or Training (4+ Hours) [100% Deductible]

If a training session, seminar, or workshop runs for 4 hours or more (excluding breaks), any meals served are fully deductible. This applies whether it’s catered or informal, as long as it’s part of the working event.

If the event is primarily entertainment-focused (e.g. a celebratory function), it may fall under 50% entertainment rules instead.

6. Light Meals During Board or Management Meetings [100% deductible]

Sandwiches, fruit, or similar food served during working meetings (including executive meetings) are fully deductible.

Applies even in areas not open to general staff — like boardrooms or partner lounges.

7. Meals at Public Promotional Events [100% Deductible]

Meals served at business promotions that are open to the general public are fully deductible.

The key is that the public must have equal access to the food — not just staff or selected guests. Invite-only events (like client appreciation dinners) are treated as entertainment and only 50% deductible.

8. Meals Donated to a Charitable Event [100% Deductible]

Meals donated to a community or charity event are fully deductible.

This assumes the event is genuinely charitable and not tied to staff perks or marketing exposure. If any perks are received in return (e.g. VIP access or sponsorship benefits), the expense may need to be apportioned.

9. Meals Consumed Overseas [100% Deductible]

Meals consumed during overseas business travel are fully deductible — even when entertainment is involved.

The 50% entertainment limitation only applies to entertainment costs incurred within New Zealand. Make sure the travel has a genuine business purpose and that records are kept.

10. Meals for Review or Media Purposes [100% Deductible]

Meals provided to someone reviewing or writing about your product or service (e.g. food bloggers, media critics) are fully deductible.

These are considered promotional costs — not entertainment — provided the purpose is to generate exposure or coverage.

11. Discounted Meals as Part of Your Business [100% Deductible]

If you’re in the food business and offer discounted meals to the public as part of a normal promotion, the expense is fully deductible.

Free meals given to employees are only 50% deductible. Providing meal vouchers to staff may trigger FBT unless structured as a qualifying allowance.

50% Deductible Meal Expenses

Here are 5 situations where you can only claim 50%, because many of these might fall under the entertainment category.

1. Meals with Clients or Colleagues [50% Deductible]

Business lunches or dinners — even when business is discussed — fall under the 50% entertainment rule. Applies whether the meal happens on or off premises.

This applies equally to self-employed individuals, companies, and LTCs. The 50% rule is based on the nature of the expense, not the type of entity. A self-employed person taking a client to lunch can deduct 50% of the cost, just like a company can.

2. Staff Functions and Team Events [50% Deductible]

Social events, team dinners, office celebrations, and staff drinks are all 50% deductible.

Location doesn’t matter — IRD focuses on the social or private benefit involved.

3. Meals in Exclusive Staff Areas [50% Deductible]

Meals served in restricted areas (e.g. executive lounges) are only 50% deductible unless they meet the “light meal during work duties” test. If the food is more substantial or social in nature, only half the cost is deductible.

4. Food or Drink in Gifts [50% Deductible]

Drinks, cheese, hampers, and any other food or drink in a gift are only 50% deductible. Non-food items (e.g. branded mugs or notebooks) are fully deductible if itemised.

If a gift includes a restaurant voucher or cash equivalent, that is subject to FBT and not entertainment — it is 100% deductible but attracts fringe benefit tax.

5. Meals During Travel That Include Entertainment [50% Deductible]

If you take a client out to dinner while travelling, the meal is considered entertainment — so only 50% of the cost is deductible.

Applies even when the meal occurs during legitimate business travel. Meals on team retreats or client reward trips also fall into this category.

Non-Deductible Meal Expenses

Here are 4 examples of meals that are not deductible at all.

1. Meals for Self-Employed While Working Locally [Not Deductible]

Buying lunch or coffee for yourself while visiting clients or working offsite does not qualify. These are considered private living expenses.

The same applies when working from a home office — your lunch is still personal and non-deductible.

2. Meals with Friends or Family [Not Deductible]

A dinner out with friends or family is never deductible, even if business is discussed casually.

3. Meals Paid by a Look-Through Company (LTC) [Not Deductible]

Because LTCs “look through” to their owners, meal costs are treated the same as if incurred by the owner personally. That means most meals are private and non-deductible unless they meet the specific entertainment deduction rules (50%).

4. Gift Vouchers or Cash Allowances for Meals [Not Deductible]

Gift cards for restaurants or cash for meals do not count as deductible entertainment. These are fringe benefits and are generally non-deductible unless subject to FBT.

If structured correctly as an overtime or travel allowance, however, they may be tax-free to the employee and fully deductible — provided IRD criteria are met.

6 Common Mistakes to Avoid

Here are six common mistakes that can get you in trouble with IRD.

1. Claiming your own lunch or takeaway coffee as a business deduction
2. Treating all client meals as 100% deductible
3. Failing to separate food and non-food items in gifts
4. Giving staff restaurant vouchers and thinking they’re entertainment (they’re not — they’re FBT)
5. Including friends or family in a business dinner and claiming the full cost
6. Not keeping proper records (who, what, where, why)

Record-Keeping Requirements

To support any deduction, you should keep:

• Receipt or invoice
• Date and location
• Names of attendees
• Purpose of the meal

Final Word

Not all business meals are created equal. Some are 100% deductible. Others are only 50%. Many are not deductible at all.

Understanding the difference helps you:

• Stay compliant
• Maximise deductions
• Avoid unexpected FBT or audit issues

– Baqir Hussain, FCCA

Director, Finex Chartered Certified Accountants