Generally the Australian Taxation Office considers the purchase of wine for tasting purposes to be a private expense and therefore non deductible.
For expenses to be considered deductible they need to follow two general rules:
• Firstly, was this expense incurred in gaining or producing assessable income? Or
• Was this outgoing relevant to the gaining of assessable income?
If the answer is no, then your expense is likely to be considered as private and therefore non deductible.
The courts have considered this in various cases over the years. In one case a food and beverage analyst, who’s main role was compiling new wine lists for restaurants was denied a deduction for several mixed cases of wine purchased for wine tasting at home. The taxpayers employer did not require them to incur the expenditure (although they did help to arrange a discount price). The taxpayer consumed a quarter of the bottle for tasting and the remainder for private use. The court determined even though the tasting may help the taxpayer perform their duties, the expenditure was not necessarily incurred in order to earn their income, and did not have a sufficient connection to earning that income.
Where a business (e.g. a licenced restaurant) owner incurs expenses for wine tasting, it is more likely to have a connection to business income and be deductible, especially where the wine is tasted at the business premises, whether by the business owner or their staff.
Author: Georgia Burgess
Email: Georgia@faj.com.au
