CRA-Approved Business Travel Tax Deductions You Need to Declare

No one wants to pay more tax than necessary, so take advantage these of CRA-approved business travel tax deductions.

Out of Town Transportation Costs

No matter how you get from point A to point B while on a business trip, you’re free to deduct the expense on your taxes. The government allows for the full deduction of things like airline tickets, taxi bills, and rental car expenses. What you can’t do is rent a car to drive to a business convention and then drive it for two weeks once you’ve returned home. The government considers the extra time you had the vehicle a personal expense.

You also shouldn’t try sneaking in a diversion and calling it part of your business travel expenses. For example, if you and your business are in Montreal and you have a convention in Vancouver, you’re allowed to deduct the cost of the flight. However, you’re not allowed to take a side trip to Toronto, where you don’t have any business, and expect to use the side trip as a business tax deduction.

If you decide to use your own car to travel to and from the business trip, you’re allowed to deduct the fuel and mileage. If you’re driving while on your business trip and get a ticket, the traffic fee is not tax deductible.

Out of Town Lodging

You’re allowed to deduct 100% of your lodging bill from your taxes. The CRA doesn’t care if you decide to stay in town for an extra couple of days and sightsee however, they will object if you try using the extra days as part of your tax deduction. If you stay in town, you can be asked to prove that at least a portion of each of those days was used to conduct business.

When you eat, drink and be merry

The matter of food and entertainment can get dicey when it comes to tax deductions. Unlike your other expenses, you’re not allowed to deduct the entire food and entertainment bill. The most you can deduct is 50%.

Surprising things you can deduct

There are some business expenses people forget they’re allowed to deduct. These items include:

  • Paying for access to the hotel’s internet
  • Tips
  • Cancellation fees

If a friend who isn’t connected to your business decides to come on the trip with you, you’re not allowed to deduct their expenses on your taxes.

Hold onto your receipts

When you’re traveling for business, you’re free to use your lodging, meals, and even some entertainment as a business deduction. In fact, traveling for business represents the one time the government allows you to claim your living expenses on your business tax papers.

Final reminder

When you’ve finished declaring your business travel expenses on your CRA tax records, store your travel receipts in a safe location. Don’t throw them away. If you’re flagged for an audit, you’ll have to show your business travel receipts for the last six years.

E&E Professional Accountants has years of experience in assisting businesses with their accounting needs. We are founded and managed by an experienced corporate auditor and a former CRA tax auditor. Feel free to contact us for assistance with all your accounting and bookkeeping needs.