Meals and entertainment expenses

You can claim an input tax credit (ITC) for the GST/HST you pay on reasonable meals and entertainment expenses that relate to your commercial activities by using, in most cases, the same limitation rules as those for income tax purposes. When the deduction for income tax purposes is limited to 50% of the cost of meals and entertainment expenses, then 50% of the GST/HST you pay on those expenses qualifies for an ITC.

Charities and public institutions do not have to reduce the amounts by 50% when they are entitled to claim an ITC for meals and entertainment expenses.

You can choose one of the following two ways to calculate your ITCs for meals and entertainment expenses:

• You can claim 100% ITCs for these expenses throughout your fiscal year. If you file monthly or quarterly GST/HST returns, add the 50% adjustment for the excess ITCs you claimed during the year to your net tax calculation for the first reporting period after the end of your fiscal year. If you file annually, add the 50% adjustment to your net tax calculation for that fiscal year. Enter the adjustment on line 104 of your GST/HST return.
• You can claim 50% of the actual GST/HST you pay on these expenses during each reporting period. By choosing this method, you do not have to make any adjustments at the end of your fiscal year.

Long-haul truck drivers

Meal and beverage expenses of long-haul truck drivers are deductible at a higher rate than the 50% permitted for other transportation employees. During eligible travel periods in 2012, meal and beverage expenses are deductible at 80%.

You are a long-haul truck driver if you are an employee whose main duty of employment is transporting goods by way of driving a long-haul truck, whether or not your employer's main business is transporting goods, passengers, or both.

A long-haul truck is a truck or tractor that is designed for hauling freight, and has a gross vehicle weight rating of more than 11,788 kg.

An eligible travel period is a period during which you are away from your municipality or metropolitan area (if there is one) for at least 24 hours for the purpose of driving a long-haul truck that transports goods at least 160 kilometres from the employer's establishment to which you regularly report to work.

The following chart shows the allowable ITC limits for tax paid on food and beverage expenses for reporting periods from 2008 and after.

If you are a quarterly or monthly filer and you decide to claim a 100% ITC for these expenses throughout the year, you need to make an adjustment for the excess ITCs you claimed during the year in your first reporting period for the following fiscal year. Enter the adjustment on line 104 of your paper return or include it in your line 105 calculation if you are filing electronically.

Forms and publications

• Guide RC4022, General Information for GST/HST Registrants
• Guide RC4082, GST/HST Information for Charities
• GST/HST Memorandum 8-1, General Eligibility Rules
• GST/HST Memorandum 8-2, General Restrictions and Limitations

Date modified:

2014-01-13