YEAR END REPORTING

Meals, Entertainment and Travel

Generally, the deduction for expenses for food and beverages (meals) and for other entertainment expenses is limited to 50% of the cost. An expense for meals and entertainment is not deductible unless you can establish that it was directly related to the active conduct of a trade or business, with business discussed during, directly before or directly after the meal or event. You (the taxpayer) or an employee must be present. Meals consumed while on business travel are automatically considered to be business related.

An exception to the 50% limitation applies to meals and recreational expenditures primarily for the benefit of employees (i.e. holiday parties and other employee functions) or food and beverages made available to the general public (i.e. open house). These expenditures are generally fully deductible. 

The receipt threshold for travel (excluding lodging), meals, and gifts is $75 per expenditure. However, the business connection of the expense must still be substantiated. Lodging and any expenditures of the above nature that exceed $75 require receipts.