In several industries, it can be common to travel to conduct business, whether that is to gain clientele or expand your training/education etc. However, there is some strict criteria when it comes to travelling as to what is an eligible business deduction and is not. See below some of the criteria below:
- When it comes to conventions specifically, CRA allows the business two deduct costs of attending two a year. However, the conventions cost they must relate to your business/professional activity and the personal portion of the trip must be adjusted for
- Personal vs business travel
- If wanting to claim travel conducted for business purposes, you would need to demonstrate that the expenses you are incurring are purely business related (going to the conference, eating out with a client, staying in a hotel for the conference etc.)
- Keep in mind that if the conference was two nights and you took a weeklong trip, it would be evident that part of the trip was personal and those expenses on those days would clearly not be deductible
- Avoid issues with CRA
- The expenses that you are claiming as a business expense must be incurred for business purposes and must be able to demonstrate as such so keep a log/schedule of your trip
- If there is a personal portion of your trip, adjust those amounts out as a shareholder loan
- For the portions that are for business, make sure you keep receipts/invoices etc.
- Travel meals and entertainment
- As with all other meals, if while travelling there are meals with clients or meals at the convention etc., there is a 50% limit of what can be claimed (this applies to GST if applicable)
- If a convention includes the cost of meals/entertainment costs but does not show it separately on your bill, you can deduct $50 per day from the total convention fee for meals/entertainment which the 50% limit would apply to
The most important to know your limitations of what an allowable deduction is, and not to exceed those limitations. Excessive travel could trigger a CRA audit, and without valid records could result in issues for your business. Visit us at Jibe Accounting for your T2 filing and bookkeeping to keep detailed records and advise you on what is a reasonable travel claim.