Tax rules, thresholds and administrative procedures can change. Confirm current official requirements and obtain advice for material transactions or unusual facts.
Business purpose comes first
A receipt proves payment but not deductibility. Record who attended, the business discussed and how the cost related to earning income. A personal dinner does not become business entertainment because a client was mentioned.
Meals and entertainment limits
Many food, beverage and entertainment expenses are subject to a deduction limit, with exceptions for specific situations. GST/HST input tax credits may also be restricted. Apply the limit after separating personal portions and reimbursements.
Travel
Business travel can include transportation, lodging and reasonable incidental costs. A spouse's travel is not automatically deductible. Combining vacation and business travel requires allocation based on purpose, days and incremental costs.
Example
A consultant attends a three-day industry conference in Vancouver and stays two additional personal days. Airfare may be primarily business where the trip was undertaken for the conference, while extra hotel, meals and activities for the personal days are not business costs. The conference agenda and registration should be kept.
Local meals and home area
A meal near the regular workplace is not deductible merely because work was discussed. Overtime meals, employee events and amounts billed to clients can have distinct treatment.
Expense policy
Require itemized receipts, attendees, purpose, project or client and approval. Separate alcohol, entertainment tickets and personal guests where needed. Review large or unusual costs before reimbursement.
This article provides general Canadian tax information and is not a substitute for tax, legal, financial or investment advice based on complete circumstances.