How much of my meals and entertainment can I deduct for business in Ontario?

The federal Income Tax Act restricts the deduction for meals and entertainment expenses to 50 percent of the eligible amount. This applies whether you are a self-employed individual or a corporation. So if you spend $200 on a business dinner with a client, you can deduct $100 as a business expense.

To be deductible at all, the meal or entertainment must be incurred for business purposes — to earn income from the business, not for personal enjoyment. The CRA may ask for documentation showing who attended, the business purpose, and the amount. Receipts should be retained, and a brief note on the back identifying the purpose and attendees can be very helpful if you are audited.

There are limited exceptions where the full amount is deductible (for example, when meals are provided to employees at a remote work site or through a subsidized cafeteria arrangement), but for the typical client dinner or event, the 50% rule applies. The meal must also be reasonable in cost — lavish spending can raise CRA scrutiny even on the deductible portion.