Tax Tip Thursday

This week, we are going to talk about groceries. Some of what we talk about will just be general tips to keep the cost down, but we are also going to talk about how you might be able to claim your food on your taxes!

Some Insight

Did you know that you can return expired food? Of course you can’t just return the loaf of bread that went off at the back of the cupboard after a month, but if you just bought something a couple of days ago and it’s already bad, you may be able to take it back and exchange it! Yes, even if you bought it on sale. Which brings me to my favourite part of shopping… 50% off!

Watch for those 50% off stickers at Zehrs. You can get some great value out of those. They even make fun of me there, now. I can almost fill my whole cart with just 50% off items!

For example, this week I was able to get $315 worth of groceries for just $215. That’s $100 off! I got pork tenderloin, chicken, and hamburger all for 50% off. Freezers are a wonderful thing!

Preparation

Make sure you keep all these receipts. Even if you don’t end up claiming any of it, keep the pieces of paper! I keep almost all of mine.

• Groceries: keep these for your tax returns.
• Meals and entertainment: I keep a log to see where my money is going.
• Gift cards: so you know who you gave them to.

Tax Tip

Did you know that self-employed people can claim food, beverage, and entertainment expenses? They must be incurred for the purpose of earning income from a business or a property and you have to be able to prove such a thing, but you can claim them! In general, you can only claim up to 50% of the expenses, but that’s still a lot of money.

Some special rules that you should know because they can make a big difference:

• If you pay for meals and entertainment at a fundraising event for a registered charity, those expenses are 100% deductible.
• When someone conducts a special event for their business, these expenses are also 100% deductible. The event must be conducted at a particular place of business (office, restaurant, hotel, convention centre, etc.), and the event must be available to all employees. A good example would be an employee appreciation day or a Christmas party.
• You can also deduct up to 50% of expenses (including hospitality, meals, drinks, mileage, etc.) if you take a client to a sports game, concert, or other similar event.

There are a few more examples, but they are less common.

To Summarize

In general, we advise against trying to claim your grocery bills. However, if you were to have a party at the office for all your employees and you supplied all the food from the grocery store, I would certainly claim that as a business expense!

It’s also worth noting that you can only claim the HST input tax credit (ITC) that relates to the portion of the meals and entertainment expenses that are actually deductible (usually 50% as described above).

Need help figuring all this out? Or maybe you’re setting up your Christmas party and want to claim the expenses. Either way, give us a call and we will be happy to help!

Disclaimer:

This article provides information of a general nature only. It is only current at the posting date. It is not updated and it may no longer be current. It does not provide legal or tax advice nor can it or should it be relied upon. All tax situations are specific to each individual. If you have specific tax questions you should book an appointment for a 1 on 1 consultation.