Perron-Ali – Tax Court of Canada finds that training expenses were eligible capital expenditures

A couple wanted to start investing in rental real estate but, in the year prior to that in which they started looking seriously at potential acquisitions, they were charged approximately $34,000 by a corporation, which provided some intensive three-day weekend training sessions that were focused on different strategies for investing and dealing in real estate, as well as “mentoring” services and over-the-phone coaching. Jorré DJ characterized these expenses as an “educational expense” which (as they involved more than “simply maintaining or somewhat extending existing knowledge and skills”) were capital expenditures, so that they were not currently deductible and could be recognized only under the eligible capital expenditure (now Class 14.1 property) rules.

Neal Armstrong. Summary of Perron-Ali v. The Queen, 2021 TCC 6 under s. 18(1)(b) – Capital expenditure v. expense - Know-how and training.