The Basics of Meals and Entertainment Deductibility

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:
  1. The site is a special work site
  2. Employee works for an employer carrying on construction activities
  3. Employee is lodged at work camp for purpose of performing duties at the site
  4. Food or beverages are provided at the work camp which was constructed for the purpose of providing meals and lodging
  5. 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)