Can I write off meals and entertainment for my small business?

The deductibility of meals changed in December 2020, as part of the Consolidated Appropriations Act, with food and beverages 100% deductible if purchased from a restaurant in 2021 and 2022.

However, writing off meals and entertainment can be confusing, with some things 100% deductible, some 50% and some non-deductible. It is the purpose of the meal or event, and who benefits from it, that decides what is applicable.

Fully deductible meals and entertainment

Here are some examples which would qualify for 100% tax deductible status:

• Business meals with clients if purchased from a restaurant
• Office snacks and meals if purchased from a restaurant
• Company-wide party
• Meals and entertainment included in compensation
• Food and drinks provided free of charge for the public
• Food included as taxable compensation to employees and included on the W-2
• Treating at least half of all employees to a meal

50% deductible expenses

• Entertaining clients in-office with snacks purchased at a store
• A meal with a client where work is discussed (which isn’t extravagant)
• Dinner provided for employees working late
• Food for a board meeting
• Treating just a few employees to a meal (less than 50% of employees)
• Employee meals while traveling
• Employee meals at a conference which is above and beyond the ticket price

What is non-deductible?

• Paying for a clients’ night out where you are not in attendance
• A client meal at a restaurant where additional people like friends or spouses are invited. The friends’ meals are non-deductible; however, you can write off half of the client bill
• Entertainment expenses are no longer tax deductible. The Tax Cuts and Jobs Act in 2018, means that concert tickets, sporting games etc can no longer be deducted.

How we can help

If you need help or advice with your finances, contact us today. TaxAssist offers an expert professional advisory service. Inquire online here to book your free, no obligation consultation.

Date published Jun 9, 2022 | Last updated Jul 22, 2022

This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.