Is your office Christmas party 100% deductible?

Christmas is a time for giving and even the Income Tax Act gives a little around the holidays.  It is well known by business owners that they are only able to claim 50% of food, beverage and entertainment expenses.  It is a lesser known fact that there is an exemption to this rule for certain employer-sponsored events available to all employees.  If the following criteria are met you will generally qualify for the 100% deduction:

• The employer either provides the food, beverages or entertainment directly or makes the arrangements to provide these things
• The food, beverages or entertainment is generally available to all employees at a particular place of business
• The food, beverage or entertainment is consumed or enjoyed by your employees
• Is one of a maximum 6 events per year

It is not necessary for the party or event to be held at your place of business; it may be held at a restaurant, rental hall or other location.  The exemption also applies to the costs of food, beverages and entertainment for the employees' spouses and children, provided these are offered to spouses and children of all employees. Persons who work at the particular place of business, but not as employees, and who attend the same generally-available party or event, are also considered to be exempt. This could include owners, partners or shareholder-managers of the business.

Jonathan Audette Professional Corporation offers a free, no obligation one hour meeting for potential clients to ask any accounting and tax related questions, including understanding more about the taxation of food, beverage and entertainment expense.

Helping you see the opportunities in your numbers.

Jonathan Audette, CPA, CA                                                                     
Jonathan Audette Professional Corporation