Coffee and Water For Staff
by Doris
(Kelowna, BC Canada)
Employee Water and Coffee Expenses
What would be the correct way to account for coffees bought for employees on a fairly regular basis? (small corporation, construction, coffees consumed at morning meeting on site)
And for employee review meetings over lunch?
Doris,
CRA classifies coffee (and water) purchases served to employees and customers as food and beverages. Therefore it is subject to the same limitations as other meals and enterntaiment expenses. There is a 50% restriction on the claiming of meals and input tax credits.
There was a technical interpretation ruling on this issued in 2004. See 2004-0057101E5.
You can also refer to CRA's IT518R - Food, Beverage and Entertainment (now archived) ...
Food and Beverages
¶ 17. The 50% limitation applies to the cost of food or beverages for human consumption including any related expenses such as taxes and tips. In addition, the cost of a restaurant gift certificate is considered to be an expense for food or beverages and is subject to this limitation.
Therefore I would book all expenses relating to staff coffee to your meals and entertainment account.
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