How many times have you grabbed a quick coffee or treated a client to lunch and thought, "Can I write this off?" As entrepreneurs, it’s tempting to think every meal qualifies as a business expense, but that’s not exactly how it works in the eyes of the CRA.

And just because David from Schitt's Creek says, “It’s a write-off,” doesn’t mean it actually is!

New Here?

I’m Amelia, a Toronto-based accountant dedicated to supporting women-owned businesses. My main purpose is to help you know your numbers, increase profits, and avoid mistakes when it comes to the numbers side of your biz.

Whether it’s taking it off your plate, helping you DIY with ease with our Small Biz Starter Pack, or increasing your financial awareness—I’m here to make it simple.

Be sure to sign up for free monthly bookkeeping & tax reminders sent straight to your inbox to be sure you stay on track and never miss a deadline.

So can I deduct all my meal expenses?

You have lunch with a client and they decide to book with you? This is a write-off. You go to a coffee shop every morning to work for a few hours and enjoy a latte? Not a deductible business expense. (Much as I wish it were!)

If this is still a unclear here are a few conditions that need to be met to qualify as a deductible business expense

• The owner or an employee has to be present.
• The meal must involve a business contact—this could be an employee, a current or potential client, a vendor, or a consultant.
• The meal needs to be both ordinary and necessary for your business.
• It can’t be considered “lavish or extravagant.”

Of these four rules, the one that trips most people up is the second. To deduct a meal, there must be some form of business discussion happening before, during, or after the meal. In other words, you can’t claim a deduction if you’re dining solo!

Now, that’s not to say that you can never write off your meals. There are several situations when you can deduct 50% of your food/meal costs as a business expense (according to CRA guidelines)):

• Business meetings with a client
• In-office meetings
• Snacks and coffee for employees
• Meals when traveling for work
• Food at conferences

How does the 50% rule work when I file my taxes?

Now that we know how the 50% rule works for meal expenses, let’s break down how GST/HST fits into the picture.

Your tax preparer will take care of applying the 50% rule for you. They’ll review your profit and loss statement, take the total meals expense, and adjust it so that only half of those expenses are deductible.

Now, let’s talk about GST/HST. The 50% rule applies to the GST/HST as well. This means you can only claim input tax credits (ITCs) for 50% of the GST/HST paid on meal expenses that qualify as deductible. For example, if you paid $50 for a meal and $6.50 in HST, you’d only be able to claim $3.25 as an ITC.

What about meals while traveling for business?

If you’re traveling for business, you can still deduct the cost of your meals—even if you’re dining solo. Just keep in mind that these expenses are still subject to the same 50% deduction rule.

When can I deduct 100% of business meals?

If you host an employee event, like a holiday party or company party, you get to deduct 100% of those food expenses!

You can also deduct the full cost of any meals that are essential to your business. For example, if you’re a food blogger, you can write off the entire cost of the ingredients you use to make the recipes you post on your site.

Bottom Line:

Only write off expenses that are genuinely tied to your business, and always make sure you have the evidence to back it up if needed. That means keeping itemized receipts with details like the name of the person you met with and the purpose of the meeting.

What’s Next?

Be sure to sign up for free monthly bookkeeping & tax reminders sent straight to your inbox to be sure you stay on track and never miss a deadline.

Be sure to get your hands on my best selling DIY bookkeeping template and start catching up your books.