Travel and entertainment (T&E)
The category covering business travel, meals and client hospitality, usually one of the largest pieces of employee spending.
In short
- T&E includes flights, hotels, ground transport, meals, entertainment and incidentals.
- It is managed through a travel and expense policy, bookings and company cards.
- It is where tax limits, like the 50% rule on meals, apply most often.
Travel and entertainment, abbreviated T&E, covers costs incurred when employees travel or host people for business. It is often the largest share of spending that employees control directly, and the most visible part of any expense program.
What falls under T&E
- Transport: flights, trains, car rental, taxis, rideshare, mileage and parking.
- Lodging: hotels and short-term rentals.
- Meals: while travelling, whether reimbursed or covered by a per diem.
- Entertainment: client dinners, events and hospitality.
- Incidentals: tips, baggage fees, Wi-Fi and similar small costs.
Why it gets special attention
T&E is high volume, spread across many people and full of judgment calls: which hotel, which flight, which restaurant. It is also where tax rules bite: meals and entertainment are generally only 50% deductible in Canada, and sales tax recovery on those costs is limited the same way. And it is where most expense fraud occurs.
Companies manage T&E with a policy that sets limits, a booking channel for flights and hotels, company cards for payment, and an expense process that captures receipts and checks them against the rules.
Worked example
A quarter of T&E
A 40-person consulting firm spends $186,000 on T&E in a quarter: $71,000 on flights, $58,000 on hotels, $22,000 on ground transport, $27,000 on meals and $8,000 on client entertainment. Because $35,000 is meals and entertainment, only half of it, $17,500, is deductible.