Meals & Entertainment Expenses: What the CRA Allows (and What It Doesn't)

If you're a small business owner in Canada, you've likely asked yourself: Can I write off that lunch with a client? What about team celebrations or event tickets? Understanding CRA rules for meals and entertainment expenses can help you make smart decisions and stay compliant come tax time.

What Are Meals & Entertainment Expenses?

The CRA defines meals and entertainment expenses as costs related to food, beverages, events, or activities incurred for business purposes. This can include:

Meals with clients or potential partners
Team lunches or dinners
Tickets to events (sports, theatre, etc.)
Holiday parties or staff appreciation events

But just because it's related to your business doesn't mean it's fully deductible.

The 50% Deduction Rule

In most cases, only 50% of meals and entertainment expenses are deductible for tax purposes. This 50% rule reflects the CRA's view that there's a personal benefit tied to these expenses.

Examples subject to the 50% limit:

Taking a client out for coffee or lunch
Meals during a business trip
Attending a networking dinner or trade show event

When 100% of Expenses May Be Deductible

There are specific exceptions where you can deduct 100%:

Staff events like holiday parties (up to 6 per year)
Meals provided at remote or special work sites
Fundraising events for registered charities

Eligible vs. Ineligible Expenses

Eligible (50% or 100%)	Ineligible (0%)
Client lunches or dinners	Daily meals not tied to business
Coffee with a prospect	Meals with friends or family
Company holiday parties (max 6/year)	Club memberships or gym fees
Meals while traveling for business	Personal events, even if with clients

Documentation & Recordkeeping Tips

To stay compliant with CRA meals and entertainment rules, keep:

Detailed receipts (not just credit card slips)
Notes on the purpose of the expense
Names of attendees and their relation to your business
Date and location of the event or meal