The entertainment expenses are generally deductible by 50%. Therefore, the GST / QST that may apply can also be claimed at 50%. What would be an example of entertainment expenses limited to 50%? Entertainment expenses include reasonable amounts payable or paid for food, beverages and entertainment. One of the tax concepts is, for it to be deductible at 100% or 50%, that an expense must be incurred to acquire business income. More information can be found in the Canada Customs and Revenue Agency (CCRA) Interpretation Bulletin. Http://www.cra-arc.gc.ca/E/pub/tp/it518r/it518r-e.pdf
Therefore, in order to make it easier for you to account for entertainment expenses and avoid tax and income tax errors, we will show you how to set up your administrative purchases for entertainment expenses at 50%.
Here are the steps. Steps 1 and 2 must only be done once. Steps 3 and 4 must be done whenever you want to record an entertainment expense.
1) Create a province at 50% by copying the information below
2) Create a RESTAURANT Administrative Provider and change the Province for QC to 50% (this provider must be used regardless of the actual name or where the expense was incurred.)
3) During an administrative purchase, the calculation will be done automatically.
Note that the tip amount must be included only in the entertainment expenses. It is essential to do the registration in two steps. Enter in the Amount section, the total of the invoice with taxes but before the tip so that PC Voyages can make the calculation of the taxes correctly to 50%. Then, change the number in the Amount section to include the tip, you will need to enter it by adding a line in the distribution. It may be useful to enter the name of the restaurant in the description for future reference.
4) When entering the administrative expenses, it is possible to modify the name RESTAURANT by the real name of the supplier and then it will be easier to see it in the bank account reconciliation.
THE INFORMATION CONTAINED IN THIS DOCUMENT IS OF A GENERAL NATURE AND IS PROVIDED FOR INDICATIVE PURPOSES. FOR MORE INFORMATION, DO NOT HESITATE TO CONTACT A PROFESSIONAL.
François Lacoste – CPA, an active user of TravelWorks software