Travel expenses
When an employee or a self-employed individual travels out-of-town for
business purposes, the related expenses are tax-deductible for either the
company or the self-employed individual. You must always be able to
establish that the expenses are closely related to the business in
question. For example, expenses such as movies, long-distance charges to
home, haircuts and magazines are dubious travel expenses. Meals for people
other than the individual traveler can be covered under "Meals and
Entertainment" only if the other diners are customers or potential
customers of the business, as opposed to friends, relatives or other
employees of the business. Only 50% of meals and entertainment expenses
are tax-deductible in Canada. A business trip which is combined with a
personal or pleasure purpose is still deductible except that the personal
portion must be extracted. Since the airfare would have to be incurred for
business purposes in any case, there is no need to prorate the airfare
between business and personal-use. The same applies for the cost of the
hotel if part of each day is for personal purposes. However, if the
business portion of the trip has ended and the individual remains there
for a few more days strictly for personal purposes, he can no longer claim
hotel, meals and other similar expenses for business use. If you are an
employee of a company and you have traveled for business purposes and have
not been reimbursed by the company, then you can deduct these expenses
from your personal tax return if the company has authorized this with a
Form T2200. If you have been given a travel advance by the company, you
must keep track of actual travel expenses so that the company can collect
back any excess of the advance over actual expenses and deduct only the
actual expenses from its corporate tax return. If your spouse accompanies
you on a business trip and your spouse's travel expenses are paid by your
employer, they must be included as income on your personal tax return
since they are considered a taxable benefit, unless your spouse was
engaged in business activities on behalf of your employer during the trip.
The same principal applies to the personal portion of a combined
business/pleasure trip if the employer has paid for the personal as well
as the business portion.
The above has been summarized and does not include all of the implications affecting a particular individual, which
could vary according to the circumstances. Please contact us if you need
further assistance with any of these points.
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Travel Expenses | Simkover and Associates Chartered Accountants
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