#056 Vous dites taxes repas et de représentation?

#056 Do you say meal and entertainment taxes?

Understanding Meal and Entertainment Expenses

When the time comes to produce the harmonized tax return (the famous tax report), whether on a monthly, quarterly or annual basis, one question keeps coming up: how do meal and entertainment expenses work? Well, today we sort it all out!

Meal expenses and entertainment expenses: two simple definitions.

Meal expenses include expenses related to the purchase of food and beverages, including:

  • Restaurant;
  • Caterer;
  • Coffee.

Representation costs also represent.

  • Rewards and gifts offered to customers, partners and suppliers;
  • The price of entry tickets to a show or sporting event;
  • The rental of premises where entertainment activities will take place (e.g. a suite in a hotel to hold a reception or a box in a sports establishment).

I recommend that you write on your receipts the reason for these expenses.

For example :

  • Snack for the team meeting;
  • Networking + group name;
  • Activity with key clients.

If you get audited by the IRS, at least you won't have to use your memory to remember who you had dinner with five (5) years ago.

Deductible expenses .

Meal and entertainment expenses, as well as GST and QST, are 50% deductible. However, there is an applicable ceiling and this varies depending on your annual turnover.

Sales figures

Ceiling

$32,500 or less

2%

From $32,501 to $51,999

$650

$52,000 and more

1.25%

(taken from the Revenu Québec website).


Some exceptions:

  • Certain situations are exceptions to the rule and are not subject to the limits set:
  • Meals during an activity more than 40 km from the office: you can claim 50% of the taxes;
  • Team meals: when the entire team is present, you can claim 100% of the taxes (maximum 6 times per year);
  • Representational meals: you can claim 50% of the taxes, provided that there are at least two people on the bill;
  • Expenses reimbursed by the client: entertainment and meal expenses are 100% deductible if they are reimbursed by the client and are clearly indicated on the invoice.

So there you have it, it's not as complicated as it seems, meal and entertainment costs. You just need to know the rules that govern them. Of course, your accountant will always remain the professional to consult in case of doubt.

Do not hesitate to contact us for more information !

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