16 February 1999 External T.I. 9830975 - TEMPORARY BASE

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.

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.

Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.

Principal Issues: Are meals and lodgings deductible as a research expense if a temporary base is established overseas?

Position: NO

Reasons: IT 75R3 and meqaning of sojourning

XXXXXXXXXX 	C. Tremblay
		983097
February  16, 1999

Dear XXXXXXXXXX:

Re: Temporary Base

This is in reply to your letter of November 17,1998, wherein you asked for clarification on the comments in paragraph 32 of Interpretation Bulletin IT-75R3, Scholarships, Fellowships, Bursaries, Prizes and Research Grants. You asked whether the cost of a temporary residence overseas covering from one to four months for research overseas is an allowable research expense pursuant to paragraph 56(1)(o) of the Income Tax Act (the “Act”). You also ask whether such a temporary residence that constitutes part of a visiting fellowship granted by a foreign university is an allowable research expense.

For purposes of your extended sabbatical research travel, you expect that you will maintain a permanent home in Canada and that the temporary base overseas would itself be necessitated by research involving the use of special archives and libraries. The temporary base would serve as a convenient point of departure of many fact finding trips occupying much of the entire research overseas. Two overseas trips are foreseen, one in the fall of 1999 for three months, and another in the winter and spring of 2000 lasting about four months.

Our Comments:

If you establish a temporary base overseas so that you temporarily reside in a place other than your permanent home, (and become engaged in research work at that location), amounts paid for meals and lodging in that place are considered to be non-deductible personal and living expenses rather than travelling expenses.

In answer to your second question, whether or not a temporary residence constitutes part of a visiting fellowship granted by a foreign university is generally not relevant for the purposes of determining the deductibility of an expense. Accordingly, as noted, if you set up a temporary residence in a foreign country to carry out the work, amounts expended for meals and lodging at that temporary base are typically not considered to be travelling expenses and are thus not deductible as research expenses. On the other hand, it is likely that the travelling expenses from your temporary residence to points where your fact finding occurs, would be allowable deductions. See (a) and (c) of paragraph 32 of IT-75R3.

We trust our comments will be of assistance to you.

Yours truly,

J. F. Oulton, CA
for Director
Business and Publications Division
Income Tax Rulings and
Interpretations Directorate
and Policy Legislation Branch

- 2 -