Travel expenses

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Raj Mehan

Tax Question:

I am going to an out-of-town work-related conference and I will stay after the conference for vacation. What expenses can I deduct in my business for travel?

Facts:

In order for travel expenses to be tax deductible they need to be incurred primarily for business. The Canada Revenue Agency (CRA) does not want you to take a personal vacation and then deduct the related expenses because you discussed business for one hour.

Discussion:

There are several factors to consider when determining which conference expenses can be deducted:

  1. The conference taken must relate to the company’s business. If the conference is taken primarily for personal knowledge or enjoyment, then any costs associated with it would not be deductible.
  2. Travel costs incurred to go to and from the location of the conference are only deductible if the primary purpose of the trip is to attend the conference.
    For example: You are going to Munich for one week of personal vacation but then find out that there is a one day work-related event during the week you are there. Since your primary purpose of going to Munich is personal, the travel costs are not deductible. You would still be able to deduct the cost of the work-related event though such as the conference fees. On the other side, if the primary reason for the trip is to attend the conference for your business see point (3) below.
  3. If any part of the trip is personal, expenses that occur at the destination will need to be allocated between work-related and personal. This includes accommodation, food and other minor costs.
    For example: A doctor lives in Vancouver, BC, and is going to London for a medical conference for his business. The conference is five full days long and he plans on staying two extra days after the conference for vacation. He would not stay in London if there was not a conference. Therefore, he can deduct in his business the full amount of the flight costs to and from Vancouver and London, the transportation costs to and from the airport and hotel expense as the conference is the primary reason for the trip. The accommodation, food and other costs relating to the conference would be deductible for the five days he attends the conference. For the two days after the conference, these costs would be considered personal and therefore, not deductible.

Raj Mehan, B.Com, M.Com, Junior Associate

Email: faqs@gilmour.ca
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