The maximum amount you can claim for food, beverages, and entertainment expenses is 50% of either the amount you incur or an amount that is reasonable in the circumstances, whichever is less.
These limits also apply to the cost of your meals when you travel or go to a convention, conference, or similar event. However, special rules can affect your claim for meals in these cases.
You can deduct the cost of going to conventions, up to two a year. The conventions have to:
- relate to your business or your professional activity; and
- be held by a business or professional organization within the geographical area where the organization normally conducts its business.
This second limit may not apply if an organization from another country sponsors the convention, and if the convention relates to your business or professional activity.
Sometimes, convention fees include the cost of food, beverages, or entertainment. However, the convention organizer may not show these amounts separately on your bill. If this is the case, subtract $50 from the total convention fee for each day the organizer provides food, beverages, or entertainment.
You can deduct this daily $50 amount as a meal and entertainment expense. However, the 50% limit applies to the daily $50 amount.
These limits do not apply if any of the following apply:
- Your business regularly provides food, beverages, or entertainment to customers for compensation (for example, a restaurant, hotel, or motel).
- You bill your client or customer for the meal and entertainment costs, and you show these costs on the bill.
- You include the amount of the meal and entertainment expenses in an employee’s income or would include them if the employee did not work at a remote or special work location. In addition, the amount cannot be paid or payable for a conference, convention, seminar, or similar event and the special work location must be at least 30 kilometers from the closest urban centre with a population of 40,000 or more.
- you incur meal and entertainment expenses for a Christmas party or similar event, and you invite all your employees from a particular location (note that you are limited to six of these events each year);
- You incur meal and entertainment expenses for a fund-raising event that was mainly for the benefit of a registered charity.
- you provide meals to an employee housed at a temporary work camp constructed or installed specifically to provide meals and accommodation to employees working at a construction site (note that the employee cannot be expected to return home daily).
Entertainment expenses include tickets and entrance fees to an entertainment or sporting event, gratuities, cover charges, and room rentals such as for hospitality suites.