So, you’ve been grabbing a few bites here and there during work – but can you actually claim that on your taxes? Good news: in some cases, you might just be able to. But, like most things in life, there’s a catch (or a few).
Whether you’re self-employed or an employee makes a big difference in how your meal expenses are treated. And don’t even get me started on entertainment expenses… that’s a whole different ball game.
Self-Employed ? Here’s The Lowdown
As a self-employed person, meal expenses usually aren’t deductible like accounting fees or your gym membership. They’re seen as personal costs (because, let’s face it, who doesn’t love a good meal?). But, and it’s a big but, there are some exceptions. If you’re working in a remote location, or on some crazy hours (the kind that make your usual lunch break feel like a distant memory), then your extra meal costs could be deductible. But don’t think you can claim that extra coffee you grabbed while you were out.
When Can You Deduct Meal Expenses ?
The key here is that you’ve got no choice but to incur those meal expenses due to the nature of your work. If that’s the case, go ahead and claim it. Here are some examples:
- Remote Locations: You’re working on a construction site far from the nearest takeaway. You’ve got no choice but to buy your meals there, and that’s deductible.
- Unusual Hours: You’re working overtime in a remote office. You can’t make it home for dinner, so you grab something on-site. That extra cost is deductible.
| Deductible Meal Expenses | Non-Deductible Meal Expenses |
|---|---|
| Meals when working away in remote locations | Meals that are considered personal |
| Meals during overtime work | Family events or personal gatherings |
| Meals while on a business trip | Meals not directly tied to work |
But Wait, What About GST ?
Now, let’s talk GST. It’s all about how your meal expenses were treated for income tax purposes. If your meal expenses aren’t deductible for income tax, then you can’t claim GST. But if you’ve got a valid tax deduction for those meals, and you’re GST-registered, then yep, you can claim that GST
| GST Claimable | Not GST Claimable |
|---|---|
| Meal expenses that are tax-deductible | Meal expenses that are non-deductible |
| Meals linked to business activities | Personal meals not related to business |
Entertainment Expenses – Now It Gets Complicated
This is where things get tricky. Entertainment expenses don’t differentiate between business types (whether you’re self-employed, a company, or anything else). What really matters here is the type of entertainment and how it connects to your business income.
How Entertainment Expenses Work
If you’re self-employed and you’ve got meal expenses that fall under entertainment, then you can claim 50% of the cost – yep, that includes the food. Not too shabby! For example, if you’re hosting a business dinner or meeting with clients, you can claim 50% of the meal’s cost, provided it’s tied to business.
Examples of Entertainment Meal Expenses
- Example 1: You take a client out for dinner to discuss business. You can claim 50% of the dinner as an entertainment expense.
- Example 2: Hosting a work-related event and providing meals for guests? You can claim 50% of those expenses.
Important Notes on Entertainment Expenses
- The meal must be tied directly to business purposes.
- You can only claim 50% of the cost for entertainment meals.
- These rules apply whether you’re self-employed or a business entity.
Need Help Sorting This Out ?
If you’re scratching your head trying to figure out if your business meal expenses are tax-deductible, don’t sweat it. We’re here to help. At BH Accounting, we can give you the lowdown on what you can claim and ensure everything’s done right. Get in touch with us, and let’s make sure your meal expenses aren’t leaving money on the table!