--- title: "Meals and Entertainment CRA Rules: The 50% Limit Explained" url: https://www.everstonecpa.com/blog/meals-entertainment-deduction-50-percent-rule-canada description: "CRA meals and entertainment rules: the 50% limit, why it also limits the GST input tax credit, and the exceptions that allow the full amount. See them." type: guide updated: 2026-10-06 summary: "For most business meals and entertainment, CRA limits your deduction to 50% of the amount, and that cap applies to the whole bill, including GST/HST, tips and any cover charge. A handful of exceptions let you claim 100% (such as up to six staff events a year) or 80% (long-haul truck drivers on eligible trips), and your GST/HST input tax credit is limited to the same 50% for most meals." faq_count: 8 publisher: EverStone CPA Inc., a Chartered Professional Accountant firm registered with CPA British Columbia and CPA Alberta service_area: British Columbia, Alberta, Ontario and Manitoba language: en-CA contact: info@everstonecpa.com · https://www.everstonecpa.com/book-online --- [Home](https://www.everstonecpa.com/) [Blog](https://www.everstonecpa.com/blog) The Meals & Entertainment 50% Rule in Canada Deductions and expenses # The meals and entertainment deduction: *why you only get to claim half* By EverStone CPA · Updated August 2026 · 8 min read **Quick answer:** For most business meals and entertainment, CRA limits your deduction to **50%** of the amount, and that cap applies to the whole bill, including GST/HST, tips and any cover charge. A handful of exceptions let you claim 100% (such as up to six staff events a year) or 80% (long-haul truck drivers on eligible trips), and your GST/HST [input tax credit](https://www.everstonecpa.com/glossary#itc) is limited to the same 50% for most meals. Keeping the receipts and noting the business purpose is what makes the claim stick. Which half of a bill is deductible is decided by who was there and why, and that is worth settling before the year-end rather than after. [Ask about one claim](https://www.everstonecpa.com/quick-question). Working from home raises a different question; see [how a corporation can pay for a home office](https://www.everstonecpa.com/blog/home-office-deduction-corporation-canada). ## Meals and entertainment expenses the CRA allows Meals and entertainment deduction rates | Situation | Deductible | The condition attached | | Most business meals and entertainment | **50%** | The cap applies to the whole bill — food, drinks, GST/HST, tips and any cover charge | | Staff social events | **100%** | Up to six a year, where the event is open to all employees at a location. Beyond six, the 50% rule returns | | Long-haul truck drivers | **80%** | Meals consumed during an eligible travel period | | GST/HST input tax credit on meals | Limited in step | The ITC is restricted in line with the deduction, not claimed in full | The rate is the easy half. The condition in the third column is what decides which row you are actually in, and it is where the claims that fail tend to go wrong. Half the bill — including the tax and the tip. **Rather have a CPA handle this?** A CPA at EverStone replies with a straight answer and a fixed fee for your situation. [Get My Fixed Quote →](https://www.everstonecpa.com/book-online?service=monthly#enquiry-form) ## Key takeaways - Most business meals and entertainment are only 50% deductible. - The 50% cap applies to the entire bill — food, drinks, GST/HST, tips and cover charges included. - Up to six staff social events a year (open to all employees at a location) can be 100% deductible. - Long-haul truck drivers can deduct 80% of meals during an eligible travel period. - Your GST/HST input tax credit on meals is generally limited to 50% as well. **Want every meal claimed at the right rate?** Our monthly bookkeeping, from $325 a month, codes meals and entertainment at 50% as they happen and makes the GST/HST adjustment, so the year-end T2 needs no clean-up. See [our bookkeeping](https://www.everstonecpa.com/accounting-services), or [get a quote for books and year-end](https://www.everstonecpa.com/book-online?service=monthly#enquiry-form). [Get My Fixed Quote](https://www.everstonecpa.com/book-online?service=monthly#enquiry-form) ## The basic rule: claim half When your business pays for a meal with a client, a coffee meeting with a prospect, or tickets to an event, the natural assumption is that the whole cost is a deductible business expense. It usually isn’t. CRA’s general rule is that food, beverages and entertainment are deductible at **50%** of the lesser of the amount you actually paid and an amount that is reasonable in the circumstances. The logic is that a business meal always carries a personal-consumption element. You had to eat anyway, so only half is treated as a genuine business cost. ## The cap includes the whole bill A detail that surprises people: the 50% limit applies to the *entire* bill, not just the food. GST/HST, the tip, delivery fees and any cover or service charge all get folded into the amount that’s then cut in half. A $100 dinner that comes to $120 after tax and tip yields a $60 deduction, not $60 plus the tax and tip on top. It’s worth remembering this when you’re estimating the real after-tax cost of client entertainment. ## The exceptions worth knowing Several situations escape the 50% limit. The ones most relevant to small businesses: - **Staff events — 100%, up to six per year.** If you host an event such as a holiday party or a summer barbecue and invite *all* employees at a particular location, the meal and entertainment cost is fully deductible. CRA allows up to six such events in a year at 100%; beyond that, the 50% rule returns. - **Long-haul truck drivers — 80%.** Meals consumed by a long-haul truck driver during an “eligible travel period” (broadly, a trip of at least 24 continuous hours away from the driver’s home municipality while transporting goods) are deductible at 80% rather than 50%. - **Billed-through and reimbursed costs.** If your business is one that regularly provides food, beverages or entertainment for compensation, a restaurant or caterer, say — the limit doesn’t apply to those costs. Similarly, if you bill a client for a meal and itemize it on their invoice, the 50% cap effectively passes to them. - **Fund-raising events.** Meal and entertainment expenses for a charitable fund-raising event can be fully deductible. Not sure what’s 50%, 80% or 100%? The meals rules have more edges than they look. We’ll set your bookkeeping up to split them correctly so you claim everything you’re entitled to — and nothing you’re not. Send an enquiry. [Send an Enquiry →](https://www.everstonecpa.com/book-online?service=monthly#enquiry-form) [See fixed fees](https://www.everstonecpa.com/pricing) ## ITC on meals and entertainment: the GST/HST credit is halved too The 50% rule doesn’t stop at income tax. If you’re a GST/HST registrant claiming [input tax credits](https://www.everstonecpa.com/blog/input-tax-credits-itc-canada-guide), the credit you can claim on most meal and entertainment expenses is also limited to 50% of the GST/HST paid. In practice, many businesses claim the full ITC through the year and then make a single adjustment to add back the 50% at year-end, which keeps the bookkeeping simple while still landing in the right place. Either way, the net effect mirrors the income-tax treatment: you recover half. ## Records are what make it hold up A meal deduction is only as good as the record behind it. Keep the itemized receipt (not just the credit-card slip), and note who you met and the business purpose — “lunch with [client] re: [project]” is enough. In a review, CRA is looking for evidence that the expense was incurred to earn business income; a pile of undocumented restaurant charges is exactly the kind of thing that draws questions. Consistent, contemporaneous notes turn a shaky claim into a defensible one, and they take seconds at the time versus hours to reconstruct later. The same discipline applies to [business travel and convention expenses](https://www.everstonecpa.com/blog/travel-expenses-business-canada-cra), and to the [dues and subscriptions](https://www.everstonecpa.com/blog/professional-dues-subscriptions-deductible) that arrive as emailed receipts and never touch a file. Sources - [Canada Revenue Agency — Line 8523: Meals and entertainment (allowable part only)](https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/sole-proprietorships-partnerships/report-business-income-expenses/completing-form-t2125/line-8523-meals-entertainment-allowable-part-only.html) - [Canada Revenue Agency — Business expenses](https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/sole-proprietorships-partnerships/business-expenses.html) - [Canada Revenue Agency — GST/HST for businesses](https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/gst-hst-businesses.html) This article is general information for Canadian business owners and is current as of July 2026. It is not tax, legal or accounting advice, and it does not create a client relationship. Tax rules change and your situation is unique, so please [speak with a CPA](https://www.everstonecpa.com/book-online?service=monthly#enquiry-form) before acting on anything here. About this article **EverStone CPA** Prepared and reviewed by a Chartered Professional Accountant at EverStone CPA, a CPA firm working with small and midsized businesses in BC, Alberta, Ontario and Manitoba. [About the firm →](https://www.everstonecpa.com/about) · [Send an enquiry →](https://www.everstonecpa.com/book-online?service=monthly#enquiry-form) The 50% limit also reaches into marketing spend, because a client gift of food, drink or event tickets is caught by the same rule. See [advertising and promotion deductions](https://www.everstonecpa.com/blog/advertising-promotion-deductions-canada) for how the rest of a campaign budget is treated. Whether any of this applies to you turns on your year-end, your structure and what else is in the picture — [ask about your own situation](https://www.everstonecpa.com/quick-question) and a CPA replies, usually the same business day. Free either way. The 50% limit is only as accurate as the coding behind it: meals and entertainment kept in their own account make the year-end add-back a number rather than an estimate, which is part of [monthly bookkeeping done properly](https://www.everstonecpa.com/monthly-bookkeeping-services). Monthly bookkeeping with meals and entertainment coded separately starts from $325 a month. ### Related articles [Input tax credits (ITCs) →](https://www.everstonecpa.com/blog/input-tax-credits-itc-canada-guide) [Home-office expenses →](https://www.everstonecpa.com/blog/home-office-expenses-incorporated-business-canada) [Vehicle & mileage deductions →](https://www.everstonecpa.com/blog/vehicle-mileage-deductions-canada-business) [Truck Driver Meals: Which Method Leaves You Better Off →](https://www.everstonecpa.com/blog/trucking-per-diem-meal-claims-canada) FAQ ## Frequently asked questions **How much of a business meal can I deduct?** Generally 50% of the cost. The cap applies to the whole bill, including GST/HST, tips and cover charges — so a $120 meal after tax and tip gives a $60 deduction. **Are staff parties fully deductible?** Yes, up to a point. An event you host for all employees at a location — like a holiday party — can be 100% deductible, and CRA allows up to six such events per year at 100%. Additional events fall back to the 50% rule. **Is the GST/HST on meals fully recoverable?** No. For most meal and entertainment expenses, your input tax credit is limited to 50% of the GST/HST paid, mirroring the income-tax treatment. Many businesses claim the full ITC during the year and add back 50% at year-end. **Can you claim the HST on meals and entertainment?** Half of it, in most cases. The input tax credit follows the income tax rule: where only 50% of a meal is deductible, only 50% of the GST/HST paid on it is recoverable. The exceptions that lift the deduction to 100% lift the credit with it. [Ask about your case →](https://www.everstonecpa.com/quick-question) **Do long-haul truck drivers get a better rate?** Yes. Meals consumed by a long-haul truck driver during an eligible travel period (broadly a trip of at least 24 continuous hours away from home while transporting goods) are deductible at 80% rather than 50%. **What records do I need to keep?** Keep the itemized receipt and a short note of who you met and the business purpose. CRA wants evidence the expense was incurred to earn business income; contemporaneous notes are what make the claim defensible in a review. **Does the 50% limit apply to meals while I am travelling for work?** Generally yes. An ordinary meal bought while away on business is still subject to the same limit, because the personal-consumption element does not disappear on the road. The main exception is long-haul truck drivers during an eligible travel period, who deduct a higher share. Keep the itemized receipt and note the business purpose either way. **Can I claim a client meal in full if I bill it back to the client?** If you itemize the meal on the client’s invoice, the limit effectively passes to them rather than sitting with you. The same applies to businesses that provide food or entertainment for compensation, such as restaurants and caterers. The treatment follows how the cost is actually billed, so the invoicing detail matters more than the intent behind it. ## Where we work The fifty per cent rule is federal, so where you are changes nothing about it. The practice runs from [the Abbotsford office](https://www.everstonecpa.com/accountant-abbotsford) and serves [Chilliwack farms and trades](https://www.everstonecpa.com/accountant-chilliwack), [Langley owner-managed firms](https://www.everstonecpa.com/accountant-langley) and [Mission operators](https://www.everstonecpa.com/accountant-mission), across [the wider Fraser Valley](https://www.everstonecpa.com/accountant-fraser-valley), and on to [companies in Vancouver](https://www.everstonecpa.com/accountant-vancouver). ## Claiming meals and entertainment for your business? Send us a note about your business and roughly how many transactions a month you run. A CPA replies by email within one business day with a fixed fee for the bookkeeping and the year-end return. [Get My Fixed Quote](https://www.everstonecpa.com/book-online?service=monthly#enquiry-form)[Book a Paid Advice Call](https://www.everstonecpa.com/advice-call) **Run your own numbers with the free calculators:** [check your GST/HST math](https://www.everstonecpa.com/gst-hst-calculator) · [run the incorporate-or-not numbers](https://www.everstonecpa.com/incorporation-calculator) · [Payroll deduction calculator](https://www.everstonecpa.com/payroll-deduction-calculator) [← Cash flow in a seasonal business — instalments, GST/HST and the lumpy year](https://www.everstonecpa.com/blog/managing-cash-flow-seasonal-business-canada) [The medical expense tax credit: the threshold, what counts, and the alternative for owners →](https://www.everstonecpa.com/blog/medical-expense-tax-credit-canada) ## Have a question about this? Ask it free through [the quick-question form](https://www.everstonecpa.com/quick-question) and a CPA replies by email within one business day. For something that needs a proper look, a one-off **Advice Call** is a paid 45-minute session with a Chartered Professional Accountant: $225 plus GST, booked by email or phone with a secure payment link. It is credited against your first invoice if you become a client within 60 days. Looking for an accountant to take this on rather than an answer? [Send an enquiry](https://www.everstonecpa.com/book-online?service=monthly#enquiry-form). [Ask a Free Question](https://www.everstonecpa.com/quick-question) [Book a Paid Advice Call](https://www.everstonecpa.com/advice-call) Email info@everstonecpa.com ★★★★★ “Personal. Professional. Responsive. Plus he saved me a bundle!” Corrin Skalbeck · Google Local Guide --- Source: https://www.everstonecpa.com/blog/meals-entertainment-deduction-50-percent-rule-canada Prices: https://www.everstonecpa.com/pricing · Contact: info@everstonecpa.com · https://www.everstonecpa.com/book-online