Deducting Travel, Meals, and Entertainment Expenses

Introduction
Understanding deducting travel, meals, and entertainment expenses is essential for self-employed individuals, consultants, corporations and professionals who frequently travel for business, meet clients or attend industry events. These expenses are among the most commonly misunderstood and overclaimed tax deductions. The CRA and Revenu Québec apply strict rules to ensure that only business-related expenses—not personal travel or lifestyle costs—are deducted. Errors in deducting travel, meals, and entertainment expenses often trigger CRA reviews, reassessments, and denied claims. This guide explains the rules, documentation requirements, eligible and ineligible expenses, and best practices for deducting travel, meals, and entertainment expenses accurately and safely.

Legal and Regulatory Framework
Deducting travel, meals, and entertainment expenses is governed by the Income Tax Act, the Excise Tax Act and Québec’s Taxation Act. Businesses may deduct:

• travel required to earn business income
• meals consumed while travelling or meeting clients
• entertainment expenses that directly relate to business activities
• lodging expenses during business trips
• transportation costs such as airfare, taxis, Uber, gas, and parking
• conference fees and related travel

However, travel and meals must meet the following criteria:

• the main purpose must be business-related
• the expense must be reasonable
• the expense must not be personal in nature
• receipts must be kept and provide complete details
• expenses must not be lavish or disproportionate to the business purpose

Meals and entertainment are deductible at 50 percent for most taxpayers. Québec follows similar rules but requires separate provincial reporting. For long-haul truck drivers, a higher percentage deduction applies.

Understanding deducting travel, meals, and entertainment expenses ensures compliance and maximizes legitimate deductions.

Key Court Decisions
Courts have issued several rulings that shape deducting travel, meals, and entertainment expenses. Important legal principles include:

• No receipts = no deductions — Courts consistently deny undocumented travel or meal expenses.
• Mixed-purpose travel — If a trip has both personal and business components, only the business portion is deductible.
• Reasonableness test — Courts reject extravagant or excessive expenses.
• Client meeting verification — Claimants must prove a business purpose for each meal or entertainment event.
• Travel companions — Spousal or family travel costs are generally not deductible unless the person performs essential business duties.

Québec courts issued similar rulings, especially for freelancers who attempted to deduct personal travel disguised as business trips. These cases reinforce the need for disciplined documentation when deducting travel, meals, and entertainment expenses.

Why CRA Targets This Issue
CRA and Revenu Québec frequently audit travel and meals because:

• taxpayers mix personal and business travel
• meals and entertainment are often overclaimed
• receipts are frequently missing or incomplete
• vague descriptions (e.g., “client meeting”) raise red flags
• international travel is heavily scrutinized
• GST/HST and QST ITCs are often claimed incorrectly

CRA audit triggers include:

• consistently high meal expenses compared to industry averages
• travel to vacation destinations
• deductions without client names or business purpose
• claiming 100 percent of meals or entertainment
• round-numbered expenses or credit-card bills without itemized receipts

Understanding deducting travel, meals, and entertainment expenses reduces CRA attention significantly.

Mackisen Strategy
Mackisen CPA uses a complete and defensible approach to deducting travel, meals, and entertainment expenses. Our method includes:

• determining which expenses qualify under CRA and Québec rules
• separating personal travel from business-related travel
• calculating allowable meal deductions (50 percent or higher for certain industries)
• advising clients on proper recordkeeping and receipt organization
• ensuring that entertainment costs are tied to income-earning activities
• applying reasonableness tests for hotel and airfare expenses
• tracking GST/HST and QST ITCs on eligible expenses
• preparing clean year-end summaries for auditors
• reviewing travel expenses monthly to avoid surprises at year-end

Our structured system ensures that all expenses claimed are legitimate, well-documented and compliant.

Real Client Experience
Many clients come to Mackisen after CRA or Revenu Québec questions about deducting travel, meals, and entertainment expenses. One consultant claimed 100 percent of all meals on business trips. CRA reassessed the return and denied half. Mackisen corrected the filings and implemented a 50 percent rule compliance system.

A Québec freelancer deducted a family vacation by labeling it a business trip. Revenu Québec denied the deduction. We separated personal versus business portions and established proper future documentation practices.

Another client failed to keep receipts for airfare and meals. CRA denied the expenses due to missing records. Mackisen implemented a digital documentation system for future compliance.

A corporate team attended conferences abroad but lacked documentation tying the conference to business income. We gathered the necessary proof, prepared explanations and preserved most of the deductions. These cases highlight why businesses need expert guidance when deducting travel, meals, and entertainment expenses.

Common Questions
Taxpayers frequently ask:

• Can I deduct meals when meeting friends who are also clients?
Only if the primary purpose is business and documentation supports it.

• Are alcoholic beverages deductible?
Yes, but still subject to the 50 percent rule.

• Can I deduct travel for my spouse?
Only if the spouse performs essential business duties.

• Are vacations deductible if I take calls while away?
No—incidental business activity does not convert personal travel into a deduction.

• How do I handle mixed business and personal trips?
Deduct only the business portion, supported with clear documentation.

• Do Québec rules differ?
Québec mirrors federal rules but requires separate entries on TP-80 and CO-17 schedules.

These questions help clarify deducting travel, meals, and entertainment expenses correctly.

Why Mackisen
With more than 35 years of combined CPA experience, Mackisen CPA Montreal helps businesses stay compliant while recovering the taxes they’re entitled to. Whether you’re filing your first GST/QST return or optimizing multi-year refunds, our expert team ensures precision, transparency and protection from audit risk. When deducting travel, meals, and entertainment expenses, Mackisen provides complete documentation guidance, compliance verification and year-round advisory to reduce risk and maximize deductions.