Convention and Business Trip Expenses
A common concern among our clients is the Canada Revenue Agency (CRA) rules pertaining to expenses related to convention and business related travel. Two things to keep in mind are the general rules CRA has for expenses. The questions they ask are: “Was the expense incurred for the purpose of earning income?” and “Is the expense reasonable?”
A few of the most frequently asked questions regarding convention and business trip expenses are as follows:
Can I combine a vacation with my business trip?
The short answer is yes. The question then becomes, how much of the trip can you deduct?
You can deduct the costs of your own travel, hotels and 50% of your meals and entertainment expenses. You cannot deduct any travel, meals or entertainment expenses for your family members. Furthermore, you can only deduct the percentage of travel/hotel cost that pertains specifically to business.
How many conventions can I deduct per year?
You can deduct two per calendar year. In addition, the convention must be held at a location that is consistent with the territorial scope of your organization. Due to the Canada/U.S. tax treaty, the CRA does allow you to deduct the cost of conventions held in the U.S. if the expense would have been deductible had the event been held in Canada. Note: The CRA does not consider conventions held on cruise ships to be deductible.
What Records do I Need to Keep?
As with all other business-related expenditures, the CRA wants to see specific documentary evidence for each expense. For example, they like to see actual receipts showing the date, vendor, and purpose of the expense. VISA, MasterCard and other credit card statements are not considered acceptable receipts by the CRA. If you charge meals and other expenses to your room, you should provide your accountant or bookkeeper with an itemized breakdown of all expenses so they can allocate expenses accordingly.
Just to reiterate, you must keep in mind two things when claiming business trips, conventions or any other type of business expense:
1) Was the expense incurred for the purpose of earning income?
2) Is the expense incurred reasonable under the circumstances?
Did you know?
The Income Tax Act specifically says that expenses related to a “golf course or facility” are not deductible. Fifty percent of expenses can be deducted for pre- or post-golf meals. One hundred percent of promotional items given to clients, such as golf balls, shirts or caps, can be deducted.