Did you say 100% deductible?! With summer upon us, many businesses are taking the opportunity to host various team events and parties. One client recently organized a fun 5km race with their team, another reserved a private space at the Abbotsford airshow, while others have enjoyed backyard BBQs by the pool and bocce tournaments in the park. These events are not just great for team building, but they can also be tax-efficient if you know the rules.

Rule of Thumb (or rule of party in this case)

The general rule is that business-related meals and entertainment are only 50% deductible for tax purposes. The Canada Revenue Agency states that the maximum amount you can claim for food, beverages, and entertainment expenses is 50% of the lesser of the following amounts:

• The actual cost
• The amount that is reasonable in the circumstances

However, there are a few exceptions to the limits above where you can deduct 100% of the costs.

100% Deductible

One way you can fully deduct the meals and entertainment costs is with company-wide/all staff social events. When meal and entertainment expenses are incurred to provide a party for all staff, the cost is 100% deductible even if clients are also invited. Your team’s spouses and kids can also be on the guest list.

Follow the CRA IT-518R Publication for Employer-Provided Social Events, which indicates that the cost must be $150 or less (including taxes) per person, and the company has not exceeded the maximum annual limit for social events, which is six.

Canadian Finance Gal is here to help you navigate the complexities of tax deductions and business expenses. By keeping these tips and tricks in mind, you can make the most of your company social events and maximize your deductions.

Enjoy the summer with your team, knowing that some of those expenses can be fully deductible. Have a party….. or six!

Note: The information above is provided for discussion and learning purposes. To receive guidance about your specific tax needs and business financials, please speak to your accountant  who understands your specific circumstances.

May you be empowered;

To learn more about specific tips and tricks for your company, contact Shanalisa!

Shanalisa Keller is a CPA, CGA and Coactive Trained Coach who founded and leads the team at Canadian Finance Gal. She has a desire to make personal and business finances less daunting and confusing. ⁣⁣She loves accounting and tax and wears the respective geek label with pride. When Shanalisa is not counting beans you can find her mixing a fun new cocktail or building a tasty charcuterie board.⁣⁣ You can read her other blogs on various small business topics here,  book a chat or coffee or wine with her here, or you can find her on LinkedIn (her favourite social platform).