Ask an Accountant: If it’s not for business purposes it’s not deductible!

Francesca Giroux, CPA
For the Lakeside Leader

Planning on taking a summer vacation? Only travel expenses that are incurred to earn business or professional income are deductible for self-employed individuals, these expenses include public transportation fares, hotel accommodation, plane tickets and meals. Of course, meals and entertainment are subject to the 50 per cent limitation, that is only 50 per cent of the expense is deductible for tax purposes.

Convention expenses have additional restrictions, a self-employed taxpayer or corporation may deduct the expenses incurred for the attendance at no more than two conventions per year, provided that the conventions meet three conditions. First, it must be held by a business or professional organization. Second, there must be in connection with the taxpayer’s business, and third the location it is held at must be reasonably regarded to be consistent with the territorial scope of the organization hosting the conference.

For example, a convention held by a Canadian business that is a national business should be held in Canada in order to be considered deductible. The 50 per cent restriction for meals and entertainment consumed or incurred at the convention is also applicable.

If the convention is combined with a vacation, the taxpayer must eliminate the personal portion of the costs to calculate what is deductible. The taxpayer will be allowed to deduct the cost of travel, which includes transportation and necessary meals and accommodation en route from the taxpayer’s business location to the convention and back, through the most direct route available. Hence an extended road trip home or stop-over in Hawaii would not be considered reasonable travel expenses!

The costs of accommodation only while participating in the convention will be deductible. Expenses that are incurred for spouse or family members that travel with the individual to a convention are considered to be a personal expense and thus are not deductible.

So whether it’s Saskatoon or Vegas, if it’s not for business purposes it’s not deductible!

Please write in with your questions to frankie@nashgirouxllp.ca.

Information provided is of a general nature. As each individual or company’s situation is unique, you may wish to consult with your CPA for information specific to your own needs.

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