Running a successful restaurant requires much more than strong food and good service. Behind every busy dining room is a business managing wages, food costs, supplier payments, GST, stock, delivery platforms and daily cash flow.
Small accounting errors can quickly become expensive in hospitality. Incorrect GST codes, incomplete cash-sales records, poor stock control or late superannuation payments can affect both profitability and compliance.
Good restaurant accounting in Australia should do more than produce an annual tax return. Accurate and timely records should help an owner understand food costs, labour expenses, gross profit, cash flow and which parts of the business are performing well.
Record Every Source of Restaurant Income
Restaurants must record and report income from all sources, including:
- Dine-in food and beverage sales
- Takeaway orders
- Online ordering systems
- Delivery platforms
- Catering and private functions
- Gift card and voucher transactions
- Corkage, booking and cancellation fees
- Cash sales
- Tips retained by the business
- Sale of business equipment and other assets
Cash takings must be recorded in the same way as card and electronic payments. Daily point-of-sale totals should be reconciled with cash counted, EFTPOS settlements, delivery-platform reports and bank deposits.
Delivery platforms commonly deduct commissions, service charges or advertising fees before transferring the balance. The restaurant should generally record the gross sale and account for the platform charges separately, rather than treating only the net bank deposit as turnover.
Complete records are legally required and should explain the date, amount, nature and GST treatment of each transaction.
Understand GST on Restaurant Sales
Most prepared food, restaurant meals and beverages sold for consumption on the premises are taxable supplies when the business is registered for GST.
A restaurant should not assume that every food purchase or sale receives the same GST treatment. Some food products may be GST-free when sold in particular circumstances, while prepared meals, confectionery, soft drinks and many beverages are generally taxable.
Mixed transactions require careful coding. For example, a grocery-style food item sold separately may have a different GST treatment from a prepared meal supplied as part of restaurant or catering services.
Restaurants should regularly check that:
- menus and point-of-sale systems use the correct GST treatment;
- GST-inclusive prices are recorded correctly;
- delivery-platform sales are not omitted or duplicated;
- supplier purchases use the correct GST codes;
- GST credits are supported by valid tax invoices;
- private purchases are excluded; and
- BAS figures reconcile with the accounting records.
Restaurant owners should also remember that wages, superannuation, bank interest and many government charges do not include claimable GST.
Common Restaurant Tax Deductions
A restaurant may generally claim expenses directly connected with earning its business income, subject to the ordinary deduction and substantiation rules.
Common restaurant tax deductions in Australia may include:
- Food, beverages and ingredients purchased for resale
- Commercial rent and eligible occupancy expenses
- Employee wages and qualifying superannuation contributions
- Electricity, gas and water
- Cleaning and waste-removal services
- Pest control
- Laundry and linen services
- Business insurance
- Accounting and bookkeeping fees
- Advertising, website and social media costs
- Delivery-platform commissions
- Point-of-sale and booking-system subscriptions
- Merchant and banking fees
- Repairs and routine maintenance
- Council permits and eligible licence fees
- Staff training connected with existing duties
- Interest on business borrowings
An expense is not deductible merely because it was paid from the restaurant’s bank account. Private expenses must be excluded, and expenditure with both business and private use must be apportioned.
Capital improvements, major renovations and equipment purchases may need to be depreciated rather than claimed as immediate operating expenses.
The Permanent $20,000 Instant Asset Write-Off
The 2026–27 Federal Budget made the $20,000 instant asset write-off permanent from 1 July 2026, and the measure is now law.
An eligible small business with aggregated turnover below $10 million that applies the simplified depreciation rules may claim an immediate deduction for the business-use portion of an eligible depreciating asset costing less than $20,000.
For a restaurant, eligible assets could potentially include:
- Commercial refrigerators
- Ovens and cooking equipment
- Dishwashers
- Coffee machines
- Point-of-sale equipment
- Computers and tablets
- Furniture and storage equipment
Eligibility depends on the asset and the circumstances. The asset must generally be first used or installed ready for use during the relevant income year. Ordering equipment or paying a deposit before year-end may not be enough.
The threshold applies separately to each asset. An asset costing exactly $20,000 does not fall below the threshold. Assets costing $20,000 or more are generally allocated to the small business depreciation pool where the relevant requirements are met.
The write-off is a deduction, not a government reimbursement. Equipment purchases should be based on operational requirements and cash flow, not solely on the availability of a tax deduction.
Monitor Food Costs, Stock and Wastage
Stock control is one of the most important financial disciplines in a restaurant.
Food and beverage purchases do not automatically represent the true cost of sales for the period. Opening stock, purchases, transfers, wastage and closing stock all affect the calculation.
Restaurant owners should regularly monitor:
- Food cost as a percentage of sales
- Beverage cost as a percentage of sales
- Gross profit by category
- Supplier price changes
- Portion sizes
- Spoilage and wastage
- Complimentary meals
- Staff meals
- Stock removed for private use
- Unexplained stock shortages
Stock used privately by owners or their families should not remain recorded as an ordinary business cost without the appropriate adjustment.
Regular stocktakes can also identify theft, over-ordering, poor portion control or menu items that generate high sales but limited profit.
Compare Your Results with ATO Restaurant Benchmarks
The ATO publishes small-business performance benchmarks for restaurants. The current benchmark data is based on information reported for the 2023–24 year and was updated in March 2026.
For restaurants, the ATO identifies cost of sales as a percentage of turnover as the key benchmark. The published ranges vary by turnover level:
- Turnover of $65,000 to $500,000: cost of sales generally between 32% and 39%
- Turnover of $500,001 to $2 million: generally between 32% and 38%
- Turnover above $2 million: generally between 31% and 36%
The ATO also publishes indicative labour, rent and total-expense ranges. These are comparison tools, not mandatory targets. A restaurant may have legitimate reasons for operating outside a benchmark, but its records should explain the difference.
Benchmarks can help identify areas requiring attention, but they should be considered alongside the restaurant’s concept, location, service model, menu and trading hours.
Manage Hospitality Payroll Carefully
Payroll is often one of the largest and most complex restaurant expenses.
A restaurant may employ chefs, kitchen staff, waitstaff, bar staff, delivery drivers, cleaners and managers under different classifications and employment arrangements. Owners must consider:
- Correct employee classification
- Ordinary and overtime hours
- Weekend and public-holiday rates
- Casual loading
- Allowances
- Leave entitlements
- PAYG withholding
- Single Touch Payroll reporting
- Superannuation guarantee
- Workers compensation
- Payroll tax, where applicable
Paying an employee in cash is not prohibited, but the wages must still be recorded, reported and subject to the applicable withholding, payslip and superannuation requirements. Cash tips received by employees are also assessable income to those employees.
Restaurant owners should obtain workplace-relations advice where they are uncertain about award classifications, penalty rates or employment entitlements.
Payday Super from 1 July 2026
From 1 July 2026, employers must pay superannuation guarantee contributions for each payday rather than relying on the previous quarterly schedule.
Contributions generally need to reach an employee’s super fund within seven business days after payday, subject to limited exceptions. The super guarantee remains 12%, but it is now calculated using the qualifying-earnings framework.
For restaurant owners with weekly or fortnightly payrolls, this change requires closer cash-flow management. Super can no longer be treated as a liability to deal with at the end of each quarter.
Restaurants should ensure:
- employee super details are accurate;
- payroll software is updated;
- contributions are processed after each pay run;
- rejected contributions are corrected promptly;
- sufficient funds are available; and
- payroll and super-clearing accounts are reconciled.
The Small Business Superannuation Clearing House is no longer available for payments from 1 July 2026, so affected businesses need an alternative provider.
Separate Business and Private Spending
Restaurant owners sometimes purchase personal groceries, meals or household supplies from the same suppliers used by the business. These transactions must be identified and treated as private.
Business funds used for private purposes may be recorded as drawings for a sole trader or partnership. For a company, private payments for shareholders or their associates may create loan-account and Division 7A issues.
Separate business bank accounts and credit cards make the distinction clearer. Owners should not rely on the accountant to identify every private transaction months after it occurred without supporting information.
Watch Cash Flow, Not Just Profit
A restaurant can report an accounting profit and still struggle to pay its bills.
GST collected from customers, PAYG withholding from wages and employee superannuation are obligations that must eventually be paid. Using these funds for everyday operating costs can create a serious shortfall when payments become due.
Restaurant owners should maintain a rolling cash-flow forecast covering:
- Supplier payments
- Rent and outgoings
- Payroll and super
- BAS liabilities
- Income tax instalments
- Equipment finance
- Insurance and licence renewals
- Seasonal sales changes
- Planned renovations or asset purchases
Weekly reporting is often more useful than waiting for quarterly or annual accounts. Regular reviews allow owners to respond earlier to rising food costs, labour pressures or declining sales.
Frequently Asked Questions
Q1. Do restaurants charge GST on food?
Most restaurant meals, prepared takeaway food and beverages are taxable when the business is registered for GST. However, some food products may be GST-free depending on what is supplied and how it is sold. Each sales category should be coded correctly.
Q2. Can a restaurant claim GST on all business purchases?
No. A GST credit is generally available only where the purchase is creditable, GST was included and the required evidence is held. Wages, superannuation, bank interest and purchases from suppliers not registered for GST generally do not include claimable GST.
Q3. Can restaurant owners claim their own meals?
Meals consumed privately by an owner or their family are generally not deductible simply because the food came from restaurant stock. Appropriate adjustments may be required for stock taken for private use.
Q4. Can kitchen equipment be immediately deducted?
Eligible small businesses applying the simplified depreciation rules may be able to claim the business portion of eligible equipment costing less than $20,000 under the instant asset write-off. The equipment must generally be first used or installed ready for use during the relevant income year.
Q5. How often should restaurant bookkeeping be updated?
Busy restaurants should generally update and reconcile their records weekly. At a minimum, sales, banks, delivery platforms, payroll, supplier accounts and stock should be reviewed monthly.
Q6. Does the ATO compare restaurants with industry benchmarks?
Yes. The ATO publishes restaurant benchmarks for cost of sales, labour, rent and total expenses. The benchmarks are indicators rather than compulsory limits, but restaurants operating outside the ranges should retain records explaining their results.
Q7. How long should a restaurant keep its business records?
Business tax and GST records generally need to be retained for at least five years, although longer periods may apply to assets, employee records, company records and unresolved disputes.
Accounting Support for Restaurants and Hospitality Businesses
Reliable hospitality accounting should help owners understand the business throughout the year, not only when the tax return is due.
Kintax Accountants assists restaurants, cafés and hospitality businesses with:
- Restaurant and café bookkeeping
- BAS and GST preparation
- Payroll and Payday Super processes
- Financial statements and tax returns
- Food-cost and wage-cost reporting
- Cash-flow forecasting and budgeting
- Business structuring and registrations
- ATO correspondence and overdue lodgements
- Purchase or sale of a hospitality business
- Year-round tax planning
Contact Kintax Accountants
Phone: 0399393692
Email: info@kintax.com.au
Office: Level 1, 287A Spring Street, Reservoir VIC 3073
Enquiries: Request a consultation
Based in Reservoir, Kintax Accountants supports restaurants, cafés and hospitality businesses throughout Melbourne’s northern suburbs and greater Melbourne.
Important information: This article provides general tax, accounting and bookkeeping information only. It does not constitute tax, legal, financial or workplace-relations advice tailored to your business. Tax, GST, payroll and employment outcomes depend on the business structure, transactions, workers and individual circumstances.
