I have a client who is a commissioned travel consultant. When she travels personally on a holiday, what portion of the cruise fare and airfare might be deductible as research? ie learning about the cruise line?
If she “travels personally” there is no deduction.
If she is researching something that will generate taxable income, any such “research costs” would be deductible. But, she would be wise to have sufficient evidence to prove to CRA that the travel costs were 100% research (i.e. 0% personal), or to prove WHAT percentage of the travel costs were research vs personal.
That percentage would have to be determined by your client, based on time spent, or the increase in her subsequent sales that directly relate to that research, or some other reasonable criteria that she could come up with. That number cannot be provided by her accountant, except to the extent that she might provide the criteria and all data to her accountant, and ask the accountant to do the calculation.
Whenever I travel personally to Hawaii, I always take a pdf copy of the Income Tax Act with me, as I am researching whether there is a tax practice benefit to writing a book about taking a tax-season break to Hawaii during tax season.
This is linked to income from my tax practice because the hypothesis is that one can be be more productive taking a hula break as stress-reduction from preparing tax returns.
I realize that this may only be 99% deductible, as at least 1% should be allocated to personal enjoyment.
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Sorry, I was hallucinating there for a minute…
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Lol. Is it still April 1st for you?
Thanks for the reply. She was told she could write off 100%
This is a really tough sell! Is there any way your client can directly link her “research” to the commission income? Not sure who told her that it was 100% deductible as you are the accountant, but I would have a hard time believing there was absolutely no personal enjoyment to the trip. And even if there was no personal component, meals and entertainment would still only be at 50%
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We perhaps could have a poll to see who was most likely to have told her this.
Maybe:
- Her hairdresser
- A drunk bar patron
- A crackhead
- All of the above
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The BEST person for tax advice is the guy next to you at the bar…
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I don’t ever sit beside a guy at the bar - could it also be the gal at the bar?
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Or – my brother-in-law the bus driver
Actually, a tax auditor picking up leads.
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Thank you. They are constantly researching on each trip. They have always sold the trip they are researching at least once. I have used in the past 50% of the travel agents travel costs as a deductable expense. CRA seems to accept this amount.