In general, expenses incurred in order to earn business
or property income are tax
deductible. However, there are limitations on some expenses, including
meals and entertainment.
Most of the time, the amount that can be deducted for food,
beverages and entertainment is 50% of the lesser of
the actual cost, or
a reasonable amount under the circumstances
What is a reasonable amount?
Canada Revenue Agency's information on meal
and vehicle expenses explains allowable meal
deductions which can be claimed without keeping receipts. The simplified method of claiming
meals
allows a claim of $17 per meal, to a maximum of $51 per day.
50% of this would be deductible.
There is a higher allowable deduction for meal costs
during eligible travel periods of long-haul truck drivers, which are
deductible at the following rates:
65% for 2008
70% for 2009
75% for 2010, and
80% for 2011 or later.
A long-haul truck driver is an individual
whose principal business or principal duty of employment is driving a
long-haul truck which transports goods.
A long-haul truck is a truck or tractor
designed for hauling freight, with a gross vehicle weight (GVW) of more than
11,788 kilograms.
An eligible travel period is a period of at
least 24 continuous hours throughout which the driver is away from the place
of work, and is driving a long-haul truck that transports goods to or from a
location that is at least 160 km from the place of work.
Sometimes, 100% of meals and entertainment are deductible,
including:
when meals and entertainment are provided as
compensation to customers, and you are in the business of providing meals
or entertainment (e.g. restaurant)
when the meals and entertainment are billed to your
customer, and are itemized on the invoice
when the meal and entertainment costs are included in
an employee's income, or would be included if the employee did not work at
a remote or special work location, and the expenses are not for a
conference, seminar or similar event
when meal and entertainment expenses are incurred to
provide a party (such as a Christmas party) or event to which all employees from a particular location
are invited (limit of 6 of these events per year). The cost will be
100% deductible even if clients are invited as well as all employees.
when meals are provided to employees housed at
temporary work camps installed for the purpose of providing meals and
accommodation to employees working at a construction site, and the
employee cannot be expected to return home daily.
when the meal and entertainment expenses are for a
fund-raising event, the primary purpose of which is to benefit a
registered charity
If you are a GST/HST registrant, you can only claim an
input tax credit for the portion of the expenses that are deductible for
income tax purposes. For most meals and entertainment, the input tax
credit would be for only 50% of the GST or HST paid.
If you are an employee of a transport business, you may be
able to claim the cost of meals and lodging, including GST/HST or PST, as a deductible
employment expense. You may be able to get an employee
GST/HST rebate.
The information on this site is not intended to be a
substitute for professional advice. Each person's situation differs, and
a professional advisor can assist you in using the information on this web
site to your best advantage.
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