Business travel deductions Regina SK
Business travel deductions
(NC)-Do you travel on business? Here's what you can and can't deduct.
"Business travel deductions for employees are complicated," says Chartered Accountant Dianne McMullen, a partner with BDO Dunwoody LLP in Toronto. "Canada Revenue Agency (CRA) designates specific rules - and many exceptions to these rules.
"Business travel expenses fall into two categories: vehicle expenses, and lodging, meals and other travel expenses. What you cannot deduct are personal expenses in either category."
That's why Chartered Accountant George Puccia, George M. Puccia Chartered Accountant in Newmarket, advises keeping detailed records. "It's essential to separate the business component of your expenses from the personal component. CRA asks a basic question: is this a business or personal expense? You need records to support your deductions."
To deduct car expenses, McMullen explains you must meet these four conditions:
• You are required to work away from your employer's office.
• Your employment contract requires you to pay your own vehicle expenses.
• You do not receive a non-taxable allowance for motor vehicle expenses.
• You keep a copy of Form T2200 Declaration of Conditions of Employment, completed and signed by your employer.
Deductible expenses include fuel and oil, maintenance and repairs, insurance, licence and registration fees, capital cost allowance and - subject to certain limits - interest paid on a loan to buy the car, or leasing costs.
"Keep a record of both the total kilometres, and kilometres driven to earn employment income - you can only deduct those expenses incurred to earn income, not personal use."
Lodging and Meals While Travelling
"Generally, these expenses are deductible if they are incurred to earn income," Puccia explains. Conditions can apply in the case of meals. "The deductible is usually the lesser of the amount paid or an amount that would be considered reasonable in the circumstances. While hotel accommodation is usually 100 per cent deductible, only 50 per cent of your meal cost may be deductible, depending on the circumstances."
If you entertain clients or customers as part of your job and you earn commissions, you may be able to deduct 50 per cent of the entertainment costs - including sports and theatre tickets, room rentals and hospitality suites, cruises and entertaining in a nightclub.
Are You Self-Employed?
McMullen adds that self-employed people must simply be able to demonstrate that they incurred their expenses to earn business or professional income. The types of eligible expenses are the same as those of employees, and the 50 per cent limitation on meals and entertainment also applies.
"Then there are the 'buts,'" Puccia continues, "all the exceptions to the rules." For example, the 50 per cent limitation does not apply to meals and entertainment if you are:
• In the food and beverage industry and the meal is provided in the normal course of business.
• Organizing a fund-raising event for a registered charity.
• Holding a staff party to which each person at a particular place of business is invited.
Also, if you invoice your customer or client separately for a meal or entertainment cost, you can claim 100 per cent of the expense (they will be the one that must deal with the 50 per cent rule).
To avoid confusion, consult a Chartered Accountant.