Meals in a Restaurant

Restaurants are an excellent location to have business meetings.  Often, you can discuss matters which you don't want overheard at the office, or just need to get away from the interuptions at the office.

In order to claim the cost of the meal (plus taxes and tip) as a business expense, you must be able to demonstrate that the meeting was for business purposes.  Note the discussion topic and who was present.  You will need their name, phone number and business address.  Keep both the restaurant receipt and the debit/credit card receipt to prove what you paid and also the amount of the tip.

Regardless of how many people were present at the meeting, you may only claim 50% of the amount that you paid.  Yes, this means that if there are six people present at the business meeting, and you pick up the bill, you can only claim 50% of the total.

If purchasing a gift card/certificate from a restaurant to give away, the 50% rule applies to the cost of the gift card.  So, if you purchase a $100 gift card, you may only claim $50 for tax purposes.  Yes, I know you can't control what the reciepient of the card does with it and Yes, I know that you weren't present when the gift card was being redeemed for a meal, you can still only claim 50% of the card.  You also need to keep track of who you gave the card to, their business adress and phone number and their business relationship with you.

Meals Included in Cost of Travel

If you travel by plane, train or bus and a meal is included in the fare, you do not have to 'remove' the price of the meal from the fare and claim it at 50%.  Claim the entire fare as 'travel'.

If you travel by ship, boat or ferry and a meal is included in the fare, you must determine the value of the meal, and only claim 50% of that.  You must subtract the entire deemed value of the meal from the fare amount you claim as 'travel'.

Meals included at a Convention, Conference, Seminar or similar event

If you pay for the event and meals are included in the price of the ticket, you must subtract $50 for each day from the cost of the ticket and claim $25 as a meal expense.  If the host provides to you  the cost of the meal, you may use that amount rather than the $50.  This rule ignores incidential beverages and refreshments available during the meeting or reception (eg coffee/tea, juice, pop, muffins, donuts etc).

For an example, you went to a three day convention.  The cost of the convention was $1,000 and all meals were included.  You would subtract $150 (3 days x $50) from the convention cost.  You will claim $75 ($150 x 50%) as a meal expense.  Therefore, the total cost of the convention for tax purposes is $925 ($1,000 - 150 + 75).