Can You Write Off Hunting Expenses as a Business?
Can You Write Off Hunting Expenses as a Business?
Deducting hunting expenses as business expenses is subject to strict regulations in the US and Canada.
The IRS generally disallows deductions for hunting trips unless they are directly related to your business. To qualify, you must demonstrate that the hunting activity has a clear business purpose. However, only 50% of the meal and entertainment expenses are typically deductible.
The CRA has similar restrictions. Expenses for recreational activities, including hunting, are generally not deductible unless you can prove they are incurred to earn business income.
However, CRA mentions, “If you employ a person in hunting, trapping, forestry, logging, lumbering, or other similar activity, you may have to make deductions from the remuneration you pay to that person.”
A tax-deductible hunting trip falls under the “entertainment facility” rules, which can limit or disallow certain deductions in unexpected ways. These rules apply to both real and personal property, meaning that some items used for business entertainment may not qualify for deductions.
For example, a shotgun is considered an entertainment facility under tax law. Since it is classified as personal property, using it for business-related entertainment does not make it depreciable or deductible. However, some related expenses may still be deductible.
For instance, ammunition (shells) used during a deductible hunting event can be written off under the out-of-pocket expense rules, much like gasoline for a non-deductible fishing boat can be deducted if it’s used during a business-related boat trip.
The key is understanding which expenses qualify and ensuring that your records separate deductible business costs from non-deductible entertainment facilities.
Boy, oh boy, these tax laws are complicated.
