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Chris981

Limited - Meal expenses/ business lunch

SOLVED
Posted By

Hello,

I just wanna know how to post a business lunch receipt in a right way.

First of all I would enter the whole amount into Sage.

For example: Meal $ 20 and Gst $1 / Bank acocunt $ 21

But I am not sure which account number I can use for the deduction?
Can I always deduct 50 % of the whole amount?

Is there something special I should know about posting things like that for a Limited?

What it better ... post deductions month by month or at the end of the year?

I hope somebody can help me .... Thank you in advance. Chris

  • 0
    verified answer

    Chris:

    The Limited business can expense meals and report the entire cost in their own in-house financials. However, when the Corporate Tax Return is prepared 50% of meals and entertainment are added to taxable income for the business.

    If you like you can separate the meals expense into deductible and non-deductible expense accounts.

    Hope this helps!

  • 0 in reply to Agate

    The taxpayer can only claim the GST on the deductible part.  

    To get the GST exactly right you could create several Service items linked to the appropriate G/L account(s) - Meals deductible, meals non-deductible, tips.  Allow GST only on the Deductible item.

    Or use a Meal and Tips item with a 2.5% GST code.  CRA may allow a GST percentage based on the estimated included average tip.   It's easier for GST, but for income tax you have to take the 2.5% non-deductible portion of the GST into account.

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