Allowable Versus Unallowable Meal Costs

There is no one answer to whether meal expenses are allowable or unallowable because it depends on the circumstances. To determine allowability check the circumstances surrounding the expense.

Meals On Company Travel

If you are traveling on official company business, whether directly related to a project or for business development purposes, the meals are mostly allowable. Mostly allowable because the meal expense is allowable only up to the Federal per diem amounts. The GSA per diem amounts are determined each year for localities across the U.S. If the hotel you stay at provides breakfast or someone else pays for a meal then you need to deduct the per diem amount from the total allowable for the day. The GSA has a breakdown of the meal per diem rates to use for deducting these meals.

Many companies reimburse their employees based solely on the Federal per diem levels and don’t take the actual cost into account. This helps ensure the expense is within the Federal limits and makes bookkeeping easier. If you decide to reimburse employees for actual cost be sure you get receipts to document the costs and also make sure the total daily cost does not exceed the Federal limits. Any cost over the per diem limits is considered unallowable. A receipt for any expense over $75.00 is required.

If a trip is a blend of business and personal then you need to allocate costs. Meals incurred while on company business is allowable and meals on personal time are unallowable. Document the days that are for business purpose to document the allowability. If there is any doubt it is best to make the expense unallowable.

Business Meetings

If a meal is part of a business meeting and incidental to the meeting then it may be allowable. A technical meeting with speaker where the meal is part of the whole meeting would be allowable. If you discuss some business during a meal then it is not allowable. To decide whether the meal is allowable or not determine whether the meeting itself would be allowable or unallowable. For the meal to be fully allowable it must be part of the whole meeting, an incidental part (meeting can stand on its own) and the meeting itself is allowable. FAR 31.205–43(c) says the meeting purpose must be “…the dissemination of trade, business, technical or professional information…”. The meal costs must be reasonable in that they can not be excessive.

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