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What Meal and Entertainment Costs Can I Deduct?
Income Tax Act s. 67.1
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
Self-Employed Foot & Bicycle Couriers and Rickshaw Drivers
Canada Revenue Agency's (CRA) information on meals and entertainment expenses for sole proprietorships and partnerships explains allowable meal deductions which can be claimed without keeping receipts, for self-employed foot and bicycle couriers and rickshaw drivers for the cost of the extra food and beverages they must consume in a normal working day (8 hours) because of the nature of their work. For 2006 and later taxation years, a daily flat rate of $17.50 can be claimed. Log books would still be needed to show the days worked and the hours worked on each of these days.
Meals Deduction for Long-Haul Truck Drivers
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:
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.
When are Meals & Entertainment 100% Deductible?
Sometimes, 100% of meals and entertainment are deductible, including:
Transport Business Employees
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.
If your corporation has paid expenses incurred to earn business or property income, and these expenses are not deductible for tax purposes, the non-deductible amount is added back to income on the tax return on Schedule 1.
If your unincorporated business has paid expenses incurred to earn business or property income, and these expenses are not deductible for tax purposes, the non-deductible amount is excluded from expenses in the statement of business or professional activities included with the tax return.
Employer Provided Social Events - Taxable Benefit To Employees
Technical Interpretation 2017-073125117 indicates that CRA's position is that there is a taxable benefit to employees who have attended a social event provided free of charge to all employees, where the cost exceeds $150 per person. There is no taxable benefit for employees who did not attend.
New/Updated CRA Administrative Policy December 2022 re Employer Provided Social Events
In-person (or combined in-person and virtual) social events provided to employees
If a free party or other in-person social event is provided by the employer, the benefit is not taxable if all of the following apply:
If the total cost for the event (not including ancillary costs) is more than the limit per person, the full amount is taxable. In this case, the ancillary costs and the cost of the attendance of the spouse or common-law partner must be included in the income of the employee.
Virtual social events provided or reimbursed to employees
Virtual social events are not taxable if all of the following apply:
If the total cost for the event is more than the limit per person, the full amount is taxable.
See CRA's Withhold payroll deductions and remit GST/HST re non-cash, near-cash and cash benefits that are taxable to the employee.
GST/HST on Meals and Entertainment
Income Tax Act s. 67.1, 12(1)(x), 20(1)(hh), 248(18), Excise Tax Act s. 236
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. Interestingly, the other 50% of the GST or HST paid is not deductible for tax purposes. CRA issued Technical Interpretation 9830806 (pdf) on this in 1998 explaining the reasoning. For a GST/HST registrant, the following would be the result of spending $114 on a meal ($100 + $14 HST):
If you are self-employed, the $57 which is not deductible could be posted to owners drawings as an alternative to adding it back on the tax return.
If you are not a GST/HST registrant, the amount to be added back on the tax return would be 50% x $114, or $57.
Employees - Taxable Benefits and Tax-Free Benefits
Canada Revenue Agency (CRA) Resources
Social events and hospitality functions
Withhold payroll deductions and remit GST/HST re non-cash, near-cash and cash benefits that are taxable to the employee.IT518R Food, Beverages and Entertainment Expenses (Archived)
GST/HST input tax credits for meals and entertainment expenses
Meal expenses of long-haul truck drivers
Revised: February 05, 2023
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