Business Meals & Entertainment: Claiming 50% ITCs

The "Lunch with a Client" Tax Rule

Networking is essential, but the tax rules for meals are designed to reflect the personal enjoyment aspect of food.

The 50% Rule

When you take a client to lunch or host a staff party, you pay 100% of the tax at the restaurant. However, when filing your GST/HST return, you can only claim half of that tax back.

• Example: A $113 bill ($100 food + $13 HST). You can only claim $6.50 as an ITC.

Exceptions (100% Recoverable)

You can claim 100% of the tax for:

• Corporate events where all employees are invited (limited to 6 times per year).
• Meals provided to employees at a remote work site.
• Costs relating to a fundraiser for a registered charity.

Tips for Record Keeping

The CRA is very strict on these claims. Your receipt should have a note on the back stating:

1. Who was there (client name).
2. The business purpose (e.g., "Discussing Q3 contract").

Estimate reclaimable GST/HST for business meals and travel expenses →

FAQ: Meals \u0026 Entertainment

Can I claim tax on coffee for the office?

Yes, coffee, tea, and snacks purchased for the "office kitchen" for general use are typically 100% recoverable as office supplies, not entertainment.

What about tips?

Tips are generally tax-exempt. Since you didn't pay GST/HST on the tip, there is no ITC to claim on it.