The 50% Rule, Client Lunches, Coffee Meetings & More

So you bought lunch for a client. Can you write it off? The short answer is yes — but only 50% of it. That’s because the CRA knows meals and schmoozing can blur the line between business and pleasure.

This post breaks down what’s deductible, when the 50% rule applies, and how to keep your receipts clean in case the CRA ever comes knocking.

🥪 When Meals Are 50% Deductible

In most cases, meals and entertainment expenses are only 50% deductible. That includes:

• Client lunches and coffee meetings
• Meals during travel for business
• Tickets to a show or sporting event with a business purpose
• Meals at a networking event or trade show

Example:
You take a client out to lunch and spend $80 (tip + tax included). You can write off $40.

⚠️ Important: You need to clearly document who you met and the business purpose. Write it right on the receipt (e.g. “Lunch with Sarah – website project discussion”).

💡 The 100% rule mostly applies to internal staff meals or promotional purposes, not client-facing entertainment. When in doubt, assume 50%.

🚫 Meals You Can’t Deduct At All

• Meals with friends that don’t involve actual business
• Your own lunch while working from home or the office
• Grocery runs and personal food (even if you’re working all day)

If it’s something you'd buy regardless of business, it’s not deductible.

📋 What the CRA Wants to See on Your Receipts

You need to document:

• Who you met with
• When and where
• Why it was a business expense

Best practice: write this info on the physical receipt, or include it in your digital records if snapping a photo with a bookkeeping app.

Also: tip and tax are included in the total amount eligible for deduction.

✈️ Meals While Traveling

Traveling for business? Your meals still fall under the 50% rule — unless you're on a per diem (allowance-based method, usually for employees), or you're reimbursed by a client.

Keep those receipts! The CRA expects documentation of where, why, and how the meal was business-related.

🍕 What About Treating Your Team?

If you’re buying lunch for staff on a regular workday:

• You can claim 100% if it’s for all staff (not just your favourite employee)
• You can also claim 100% for up to 6 staff events per year (holiday parties, team BBQs, etc.)

✅ TL;DR: Meals & Entertainment in Canada

• Most client meals and business entertainment are 50% deductible
• Some situations (staff parties, internal events) can be 100% deductible
• Keep detailed records: who, when, where, and why
• Don’t claim personal meals or social outings — the CRA sees through it

Next Up: Part 4 — Auto Expenses 🚗
We'll dive into mileage logs, gas, insurance, repairs, and what happens when you use your personal car for business.

‍