The rules · sources read on or since 14 September 2026
How much of a client meal can a Canadian corporation deduct?
Section 67.1 of the Income Tax Act limits the deduction for food, beverages and entertainment to 50% of the amount paid, tip included, and the input tax credit on that expense is limited to 50% of the GST/HST in the same way.
The rule
A business meal is deductible at 50%, not because half of it was personal but because the statute says so. The limit covers food, beverages and entertainment — a restaurant bill, tickets, a box at an event — and it applies to the whole amount, including the tip and the taxes.
The GST/HST credit follows the deduction: a registrant claims 50% of the tax on a meal, not all of it. Provincial sales tax is a cost in every case, because PST is not a recoverable tax for anyone.
Where it does not apply
A staff event open to all employees is not a client meal. Up to six such events a year are 100% deductible, and only the seventh and later fall to 50%.
A gift is a gift unless it is food, drink or entertainment. A branded jacket is 100% deductible; a restaurant gift card or a pair of tickets is 50%, because it is s.67.1 property handed over rather than consumed.
Meals billed through to a client at cost, and meals included in a travel allowance taxed to the recipient, follow their own treatment. Those are judgements for a CPA rather than settings in a calculator.
What the CRA asks for
The receipt is necessary and not sufficient. What makes a client meal defensible is who was there, which company they were from, and what the business purpose was — recorded at the time, on the record, not reconstructed in April.
A supplier's GST/HST registration number has to be on the bill for the credit to hold at all, and that is the one defect no later diligence can cure: if the restaurant has closed, a corrected invoice cannot be obtained and the credit is simply lost.
Where this comes from
- CRA — IT-518R, Food, beverages and entertainment expenses — read 14 September 2026.
- CRA — Input tax credits — read 14 September 2026.
Questions
The 50% limit on client meals.
How much of a business meal is deductible in Canada?
50% of the amount paid, including the tip and the taxes, under ITA s.67.1. The GST/HST input tax credit is limited to 50% of the tax in the same way, and PST is never recoverable.
Does the 50% limit include the tip?
Yes. The limit applies to the amount paid for the food, beverages or entertainment, and a gratuity on a restaurant bill is part of that amount.
Is a staff Christmas party subject to the 50% rule?
Not if it is one of six events a year open to all employees at a location. Those are 100% deductible; the seventh and later events in a year fall to 50%.
Can the whole GST/HST on a meal receipt be claimed?
No. The credit is limited to 50% of the GST/HST, matching the deduction. Provincial sales tax on the bill is not recoverable at all.
What has to be recorded beside the receipt?
Who attended, which company they were from, and the business purpose — recorded when the expense is entered rather than reconstructed later. The supplier's GST/HST registration number must appear on the bill for the credit to be claimable.
Put a number on it.
LedgerLodge applies this rule to every record as it is entered, stores the calculation snapshot that produced the figure, and carries both into the year-end package your accountant works from. It prepares the figures a return is built from; it does not file anything.