Generally, expenses incurred in order to earn business or property income are 100% deductible when calculating your taxable income. There are special rules that limit the deductibility of meal and entertainment expenses to the lower of 50% of the actual cost or 50% of the amount that would be considered reasonable.
When can I claim 100% of the cost of meals and entertainment?
- If you bill your client or customer for the meal and entertainment costs
- amount and type of costs must be specifically identified on the bill
- The amount is required to be included in the income of an employee and reported on their T4
- Meal allowances or subsidized meals (employee dining room / cafeteria)
- Meal and entertainment costs were incurred to provide a party or event to which all employees were invited.
- Christmas party, staff luncheon etc.
- Limited to 6 functions per year
- Amounts paid or payable for food, entertainment etc. provided for or in expectation of compensation
- Restaurants, hotels and airlines
- Amounts related to a fund-raising event the primary purpose of which is to benefit a registered charity
- Amounts in respect of items consumed or entertainment enjoyed while travelling on an airplane, train or bus
- Does not extend to travel by ship, boat or ferry
- Full cost of providing meals etc. to an employee at a remote work location or a special work site
- Amounts incurred for meals provided at a work camp if:
- The site is a special work site
- Employee works for an employer carrying on construction activities
- Employee is lodged at work camp for purpose of performing duties at the site
- Food or beverages are provided at the work camp which was constructed for the purpose of providing meals and lodging
- Amounts are not paid for entertainment or for a conference, convention, seminar etc.
What is a Remote Work Site?
Work location is remote when it is 80 km or more from the nearest established community with a population of at least 1,000 people.
• Established community – has essential services or such services are available within a reasonable commuting distance (basic food store, basic clothing store with merchandise in stock, access to accommodations, certain medical services and educational facilities)