Deducting Travel, Meals, and Entertainment – A Complete Guide by a Montreal CPA Firm Near You

Introduction

Travel, meals, and entertainment are some of the most commonly claimed deductions

by self-employed Canadians—and also some of the most frequently challenged by

CRA. Many freelancers and small business owners assume that any restaurant bill, trip,

or business meeting can be deducted. But CRA applies strict rules, requires detailed

documentation, and disallows expenses that have any significant personal component.

Understanding these rules is essential to ensuring that legitimate expenses are claimed

correctly, while avoiding costly reassessments. This guide explains exactly how to

deduct travel, meals, and entertainment expenses as a self-employed individual in

Canada, how the 50% rule works, what documentation CRA requires, and how to stay

compliant.

Legal and Regulatory Framework

Travel, meals, and entertainment deductions for self-employed individuals are governed

by the Income Tax Act, primarily:

• Section 18(1)(a) – expenses must be incurred to earn business income

• Section 18(1)(h) – personal or living expenses are not deductible

• Section 67 – expenses must be reasonable

• Section 67.1 – meals and entertainment subject to the 50% deduction limit

• CRA Business Travel Guidelines – documentation and purpose requirements

Key rules include:

Meals & Entertainment (50% Rule)

Self-employed individuals may deduct 50% of reasonable meal and entertainment

expenses if:

• the expense is incurred for business purposes, and

• the taxpayer can prove who, when, where, and business purpose.

Travel Expenses

Deductible travel costs include:

• airfare

• hotels

• taxis/Uber

• mileage (business portion)

• parking

• travel meals (subject to 50% rule)

• travel supplies

Meals consumed while travelling for business are also subject to the 50% rule unless

the taxpayer meets long-haul transportation exceptions.

Documentation must show that travel was primarily for business, not personal

reasons.

Non-Deductible Items

CRA prohibits:

• personal vacations

• meals with friends that have no business discussion

• travel that is mainly personal with incidental business activity

• entertainment of a personal or recreational nature

These regulatory rules form the foundation of deducting travel, meals, and

entertainment in Canada.

Key Court Decisions

Several important cases highlight CRA’s strict interpretation of travel and meal

deductions.

In Symes v. Canada, the Supreme Court emphasized that personal living expenses

cannot be disguised as business deductions.

In Loewen v. Canada, CRA denied travel expenses after determining the primary

purpose was personal; the court supported CRA’s approach.

In McKeown v. Canada, vehicle travel claimed as business was denied due to lack of

mileage logs.

In Sowrey v. Canada, meal and entertainment expenses were denied because receipts

lacked documentation of business purpose.

These decisions reinforce the importance of proper recordkeeping and clear business

purpose.

Why CRA Targets This Issue

Meals, travel, and entertainment claims are high-risk because they are frequently

abused. CRA identifies:

• meals claimed without noting business purpose

• restaurant receipts missing names of attendees

• travel to vacation destinations claimed as business trips

• conferences used as personal getaways

• spousal travel incorrectly deducted

• extravagant entertainment expenses labeled as "business development"

• mileage claimed without logs

• travel where business activity cannot be verified

CRA cross-checks business calendars, invoices, credit card records, and client

communications. This category is a leading audit trigger for self-employed individuals.

Mackisen Strategy

At Mackisen CPA Montreal, we help self-employed individuals claim legitimate travel

and meal deductions safely and in full compliance with CRA rules. Our structured

approach includes:

• identifying which meals and travel expenses are eligible

• preparing a documentation checklist for every trip

• ensuring receipts show names, dates, location, and business purpose

• calculating the correct 50% deduction for meals

• determining whether travel was primarily business-focused

• allocating mixed personal/business travel correctly

• maintaining audit-proof mileage logs for vehicle travel

• reviewing expenses quarterly to eliminate high-risk claims

We ensure that clients claim maximum allowable deductions while remaining fully CRA-

compliant.

Real Client Experience

A consultant traveled to Mexico, claiming it as a business trip. CRA challenged the

deduction after finding minimal business activity. We reallocated the expenses properly

and prevented penalties.

Another client deducted 100% of restaurant receipts. CRA denied half due to the 50%

rule. We corrected the approach and established a tracking system.

A freelancer attending a conference brought a spouse and attempted to deduct the full

hotel cost. CRA denied the spousal portion. We separated personal vs business

expenses and recovered allowable amounts.

Common Questions

Self-employed individuals often ask whether coffee meetings count. Yes, with

documentation—but only 50% deductible.

Others ask whether meals bought while working late are deductible. Not unless directly

tied to business meetings or travel.

Some ask whether travel expenses can be deducted if the trip includes personal days.

Yes—but only the business portion is allowable.

Another question: Can I deduct entertainment like sports tickets? Yes, if used for

business—but still subject to 50% rule and strict documentation.

Why Mackisen

With more than 35 years of combined CPA experience, Mackisen CPA Montreal helps

freelancers and self-employed taxpayers maximize legitimate travel and meal

deductions while avoiding CRA audit traps. Our expert team ensures precision,

transparency, and full compliance with CRA rules.