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.

Last updated: 22nd July 2022