Sharing a meal with a client or hosting a business meeting over coffee can be a legitimate business expense. But the CRA has strict limits on how much you can deduct, and documentation matters just as much as the expense itself.

The 50% rule

In most cases, you can deduct 50 percent of the cost of meals and entertainment.
This applies whether you dine out, order in, or host an event.

To qualify:
• The purpose of the meal must be to earn business income
• A client, prospect, or business contact must be involved
• You must record who you met and why

Personal meals are never deductible, even if you discussed work with yourself.

When 100% is allowed

Full deductions are possible in a few specific cases:

• Staff events such as a company holiday party (up to 6 events per year)
• Meals included in a seminar or conference fee
• Meals for employees at a remote or special worksite
• Promotional events where the public is invited
• Travel meals for long-haul truck drivers (subject to specific rules)

These situations require solid documentation.

What is not eligible

Common mistakes include:

• Meals eaten alone
• Meals with family unless they are also employees involved in business purpose
• Excessive or lavish spending without a reasonable business justification
• Claiming client meals where no business relationship exists

If questioned, you must be ready to explain the business benefit.

What your receipt should show

• Restaurant name and date
• Amount paid and GST/HST
• Who attended
• Business purpose

Write the client name and topic on the receipt immediately.
This habit makes audit support easy.

GST/HST considerations

The 50 percent limit applies to both:
• Income tax deduction
• GST/HST ITC recovery

If only half the expense is deductible, only half the tax is recoverable.

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