Can I deduct my meals and entertainment expenses?

Like most answers related to income tax, it depends!

In order to qualify as a deductible expense, the self-employed or commissioned salesperson must be able to demonstrate that the amount paid was incurred for the purpose of earning income and is a requirement under their conditions of employment. Such expenses may include:

• meals eaten with customers
• the cost of tickets for a theatre, concert, athletic event or fashion show
• the cost of private boxes at sports facilities
• the cost of cruises
• the cost of entertaining guests at clubs (night, social, and sporting)
• taxes, gratuities, and cover charges

The following meals and entertainment expenses are examples that do not qualify:

• costs incurred for use of recreation facilities and club dues
• purchase of season tickets for sporting events (unless satisfactory proof is provided that the tickets are a promotional expense)
• meals claimed while outside a sales territory or on a vacation
• meals taken after a golf game (at the club house)

Generally, the Canada Revenue Agency (CRA) permits a deduction of 50% of the cost of meals and entertainment but there are exceptions to this rule. For example, if the business of the taxpayer is to provide food, beverage or entertainment then the costs of promotional samples is not restricted to 50%. Also, the cost of meals, beverages and entertainment provided on planes, trains or busses are not subject to the 50% deduction rule.

Always consult your tax professional before claiming meals and entertainment expenses on your tax return.