Photo: Sydney Harbour Bridge, NSW
A winery visit, food tour, sightseeing experience, or cultural activity — if your business paid for it, can you claim it? For high-income earners, business owners, and investment entities, understanding where the ATO draws the line on private expenses versus deductible benefits is not just useful. It can save you thousands.
1. The General Rule: Private Expenses Are Not Deductible
As a starting point, any expense that is purely private or recreational in nature is not deductible to a business. This includes holidays, leisure tours, sightseeing excursions, and entertainment activities that have no direct connection to producing assessable income. This is consistent with the ATO's core deductibility test under section 8-1 of the Income Tax Assessment Act 1997, which requires that an expense must be incurred in gaining or producing assessable income to be deductible.Why This Matters for Business Owners and High-Income Earners
Many business owners assume that if a business credit card paid for an activity, it is automatically deductible. That is not how the ATO assesses it. The nature of the expense and how it was structured determines whether it qualifies — not simply the payment method.
2. The Key Exception: The Minor Benefits Exemption (Under $300 Rule)
Under the FBT system, certain benefits provided by an employer to employees can qualify as minor benefits, which are exempt from FBT entirely. This is where a private day tour has the potential to become a legitimate, deductible business expense. For a benefit to qualify as a minor benefit exempt from FBT, it must satisfy all of the following conditions:- Provided to an employee or associate (including family members) of the employer
- Not a cash benefit or cash equivalent
- Valued at less than $300 per benefit (GST inclusive) per person
- Provided infrequently and irregularly — not on a systematic or recurring basis
- Not part of a salary packaging arrangement or structured remuneration scheme
Important: The $300 Threshold Is Per Benefit, Not Per Person Across the Year
The $300 threshold applies to each individual benefit on each individual occasion. If a single tour costs $299 per person and is a one-off event, it may qualify. Multiple tours of $150 per person provided monthly to the same employee would not — because the regularity condition fails, regardless of the per-occasion cost.
3. How a Private Day Tour Can Become Tax Deductible
When the minor benefits exemption applies, the employer is generally entitled to both outcomes below:- ✓ Claim the cost of the tour as a business deduction
- ✓ Be exempt from paying FBT on the benefit provided
- ✗ No FBT liability for the employer
- ✗ No taxable benefit recorded for the employee
4. Practical Examples
Example 1 — Likely Qualifies
One-Off Food Tour During a Business Trip
- Cost: $180 per employee
- Occasion: One-off during an annual conference
- Not part of any salary package
- All employees treated consistently
✓ Likely qualifies as FBT-exempt minor benefit. Business deduction generally available.
Example 2 — Does Not Qualify
Monthly Sightseeing Tours as a Staff Reward Program
- Cost: $150 per employee per tour
- Occurs every month
- Structured as part of an employee reward program
✗ Fails the infrequency test. Likely subject to FBT. Minor benefits exemption does not apply.
5. Important Considerations Before You Claim
Even where the minor benefits exemption appears to apply, there are several practical steps businesses should take to protect their position:- Keep proper documentation for every event, including original invoices, a list of attendees, the date, and a brief note on the purpose or context of the activity
- Ensure a clear business rationale is documented where applicable — for example, staff recognition following a project completion, team morale during a business trip, or a work-related travel context
- Treat similar expenses consistently across your organisation — the ATO may look at patterns of behaviour across the FBT year, not just individual transactions
- Confirm that no salary packaging arrangement is in place — if the tour is part of any structured remuneration agreement, the minor benefits exemption will not apply regardless of the cost
- Consider the cumulative value of all minor benefits provided to a single employee during the FBT year, as repeated minor benefits to the same person can attract scrutiny
A Note for Companies Operating Under Trusts or Investment Structures
If your business operates through a family trust, company, or investment entity, the FBT rules still apply where the benefit is provided to an employee or director. The structure of your entity does not exempt you from FBT obligations. For high-income earners and investment entities, getting this right often requires a broader review of how benefits are structured across the group. This is a conversation worth having with a specialist.
Key Takeaway
The Short Answer
Private day tours are generally not deductible as a business expense. However, they can become deductible under the FBT minor benefits exemption when each benefit costs less than $300 per person and is provided infrequently and irregularly — and where no salary packaging arrangement is in place. Proper structuring and documentation are not optional extras. They are what stands between a legitimate deduction and an unexpected FBT liability.Not Sure Where Your Expenses Stand?
Our CPA accountants in Bankstown and Wollongong specialise in advanced tax planning for business owners, high-income earners, and investment entities. Book a free 30-minute consultation and find out exactly where you stand. Book a Free Call TodayGeneral Advice Disclaimer: This article is intended as general information only and does not constitute personal tax advice. It does not take into account your individual financial circumstances, needs, or objectives. Before acting on anything in this article, you should seek specific advice from a registered tax agent or CPA who can assess your situation. Tax laws and ATO interpretations are subject to change. Impact Taxation and Financial Services Pty Ltd is a CPA Practice. Liability limited by a scheme approved under Professional Standards Legislation.
