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Travel Expenses – Are They Tax Deductible?

Published: 30 July 2006

As schools close and summer comes into full swing, and the dreaded words “I’m Bored”start to eminate from your children, thoughts of traveling start to cross your mind. The problem with most travel, is that the costs are paid out of after tax personal funds but is that always the case?

When I was young my parents took the entire family to Europe for five weeks. The younger kids and Mom went first to visit all the relatives and then the oldest and Dad arrived to join in for the final three weeks. At the time my father had a business where he imported lighting fixtures from Europe and had scheduled appointments with his suppliers throughout weeks three to five. As the suppliers were in Germany, France and Australia, he rented a car that could accommodate the entire family and a road trip ensued.

A few years after the trip, my father’s business was audited by Revenue Canada – the former name for the Canada Revenue Agency. The auditor focused on the following issues: what was the purpose of the trip, who went on the trip, and what expenses were deducted. My father‘s business had deducted the cost of his and Mom’s flight, the rental car for the last 3 weeks of the trip, hotel costs while on the road and 2/5ths of all food costs for the last 3 weeks. The position my father took was that he and Mom both had to go on the trip, they would not have rented any other type of car and they would have had food and hotel costs anyway. The other issue is that it was necessary for Mom to go as she was an intricate part of the company due to her legal background and negotiating contracts was one of the things accomplished on the trip. After all the receipts were scrutinized, CRA accepted my father’s claim, after all, he was reasonable.

The reason I think this story is so wonderful is because it shows that if you plan things properly, you can make a portion of your trip tax deductible. Yes, we had a family vacation and as kids, we got to sight see while Mom & Dad were in meetings, but we were in Europe! The museums, the history and the culture were experiences that I will never forget despite the fact that this trip happened back in 1975. The issues for CRA are still the same, if your reasons for taking the trip are related to your business, if the costs claimed are reasonable and you have allocated a portion for any personal element and if ultimately, the result was that you earned income as a result of making that trip, yes, you can deduct your travel costs.

About the Author

This article was written by Gabrielle Loren -- a partner with Loren & Company, CGA's located in North Vancouver, BC and can be reached at gabrielle@loren.bc.ca, at 604-904-3807 or check out their website at www.loren.bc.ca

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