I have a husband and wife, owner operators ( only shareholders ) of a incorporated indoor batting cage. They wanted to leave the area and put the business up for sale. The business has not sold, so they hired a manager to run it so they could move away. After a short time the manager did not work out and they had to incur both ferry and hotel cost in order to come back and manage their business. Would these travel expenses be claimable?
Have the books of the corporation been properly written up?
Have financial statements of the corporation been prepared?
Has the CPA signed off on those financial statements?
Part of the required management of a corporation includes the above, so that should be done first.
I am in the process of doing up their financial statements, but records have been kept properly. All expenses have been paid out of pocket by owners, so those are not " in the books" yet. That is my question? Are these travel expenses deductible in this circumstance? All I can find with the CRA is that travel expenses are deductable if they are for earning income.
“records have been kept properly. All expenses have been paid out of pocket by owners”
Those two statements appear to be mutually exclusive.
Also, “Shareholders” do not have “business expenses”, and nore do the earn “business income”.
Personal travel expenses do not appear to have anything to do with the he corporation.
The corporation’s books need to be written up first, and T2 and T4s prepared as necessary.
On the personal T1, S62 moving expenses deduction could be involved if they meet all the criteria for moving residence.
Thank you for clarifying Joe. Obviously , Incorporated accounts are fairly new to me and I am still learning the proper terminology.
BTW, I meant travel expenses were paid out of pocket - not business expenses.
If you consider the shareholders as also “employees”, then yes, the business can reimburse employees for travel expenses incurred to earn business income. But the typical restrictions apply - travel must originate at the place of business, and there must be a business reason for travelling AWAY from the business. From the sounds of it, your clients were travelling from their home to the business, and that is not deductible.
The books of this corporation needs substantially more comprehension and expertise than to get roles and capacities muddled.
Just because I may be (for example) a shareholder of Royal Bank, and consider that i may also be beholden to them, doesn’t mean that I get to deduct my travel expenses should I decide to visit a branch of the bank…