Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.
Principal Issues: Are the travel expenses incurred to return a business owner home from vacation for urgent business matters deductible?
Position: No
Reasons: Paragraph 18(1)(h) only allows travel expenses that are incurred by the taxpayer while away from home in the course of carrying on the taxpayer's business
XXXXXXXXXX 2011-042647
A. Townsend
February 13, 2012
Dear XXXXXXXXXX :
Re : Travel Expenses
This is in response to your letter received by our office on November 2, 2011, asking if the travel expenses incurred to return a business owner home from a vacation to deal with business matters are deductible as business expenses.
All statutory references in this letter are references to the provisions of the Income Tax Act, R.S.C. 1985 (5th supp.) c. 1, as amended (the "Act").
It is not this Directorate's practice to comment on transactions involving specific taxpayers other than in the form of an advance income tax ruling. However, we can offer the following general comments, which we trust will be of some assistance.
Paragraph 18(1)(h) does not allow the deduction of any personal or living expenses from business income, other than travel expenses incurred by the taxpayer while away from home in the course of carrying on the taxpayer's business. Generally, expenses incurred to make an individual available to the business, or incurred in travelling from home to the business, are considered personal expenses as an individual is expected to be available to the business to earn business income. Furthermore, travel expenses incurred to return an individual home from vacation are not considered to have been incurred "while away from home in the course of carrying on business", as required by paragraph 18(1)(h). Therefore, although travel expenses incurred to return a business owner home from vacation to attend to urgent business matters has a business element, the deduction is not permitted under paragraph 18(1)(h).
In addition, where the business owner is acting in his/her capacity as an employee or a shareholder and the business pays the travel expenses to return the individual home, a taxable benefit to the individual may result.
We trust these comments are of assistance.
Yours truly,
Doug Watson
For Director
Business and Trusts Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch
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