Great news!!! Self employed individuals can claim food, beverage and entertainment expenses incurred for the purpose of earning income. The bad news its only 50% deductible.
Most of us know the cost of food and beverages and are subject to the 50 percent rule. Its a long established rule but did you know this also applies to employees such as commission salespersons and travelling expenses of employees ordinarily required to work away from the employer’s place of business?
Exceptions to the 50% rule:
- The employer adds the meal and entertainment expense in and employees income then its 100% deductible.
- You invite all your employees to a Christmas party or similar event – note that you can only six of these events per year
- Your client gets billed for the cost of the meal. 50% limitation would, however, apply to the client
- If you attend a convention and the meal fee is not broken out then you have to claim $50/day as a meal expense, which is subject to the 50% limit.
- Incidental food does not count, do not claim muffins, coffee or any other incidental food provided during a convention or event.
- Tips and HST are only 50% deductible
Records should be maintained of the names and business addresses of the customers or other persons being entertained, together with the relevant places, dates, times and amounts supported by such vouchers as are reasonably obtainable.
If you are unsure whether to claim an expense, then get in touch with a qualified accountant that can help provide some guidance.
Wishing you continued success, Jason