7 November 1991 Income Tax Severed Letter - Convention Expenses/Expenses of Training - Retirement SeM.N.R. - Direct Reimbursement Dental Plans

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.

Subject: XXX

We are writing in reply to your memorandum of September 2, 1991, wherein you requested our comments on the following three issues raised by the XXX during a recent meeting with your Division:

• 1. Convention Expenses / Expenses of Training. The XXX have requested that we accept expenses incurred with respect to XXX conventions, that primarily consist of scientific continuing education, as being training expenses rather than convention expenses. They have also requested that IT-131R2 be revised to reflect this matter and to state that such training expenses would not be considered to be capital in nature.
• 2. Retirement or Pre-Retirement Courses and Seminars. The XXX have requested our opinion as to whether the costs of registering or attending such courses or seminars would be deductible in computing income from their professional practices.
• 3. Direct Reimbursement Dental Plans ("DRDP"). The XXX have requested our views, from both the employer and employee's perspective, on the income tax aspects of their DRDP's with particular emphasis on their being considered to qualify as a Private Health Services Plan ("PHSP") as defined in subsection 248(1) and discussed in IT-339R2.

Our Comments

• 1. Convention Expenses / Expenses of Training.

From our review of the XXX letter of August 26, 1991, it would appear that they are requesting a blanket ruling to the effect that any meeting of the XXX where some element of "scientific continuing education" was present, would not be considered to be a convention and the costs incurred would not be considered to be capital in nature and, on the basis that these costs are training costs, would be deductible in computing professional income.

As you are undoubtedly aware, whether or not a particular self-employed person is entitled to deduct the costs of attending a particular meeting or convention in a year and whether the costs are capital in nature, involves a finding of fact that can only be determined after the particular individual has filed the appropriate income tax return. In this regard, we can only draw the XXX attention to the comments in IT-131R2 and IT-357R2, which sets out the Department's views on these matters.

The fact that a trade show is conducted in connection with such a meeting would, in our view, indicate that the meeting was in fact a convention for purposes of subsection 20(10) and not a training course.

In view of the above, it is our opinion that the XXX should be advised that we are unable to comply with their request and that the provisions of subsection 20(10) would in all probability apply to such meetings unless the facts in a particular case indicate otherwise.

• 2. Retirement or Pre-Retirement Courses and Seminars

It is our opinion that these costs, being personal expenses, would not be deductible in computing professional income by virtue of paragraph 18(1)(h).

• 3. Direct Reimbursement Dental Plans ("DRDP")

XXX It is our opinion that whether or not any particular DRDP would qualify as a PHSP would involve a finding of fact after having reviewed details of the particular plan in conjunction with the definition of a PHSP in subsection 248(1) and the comments in paragraphs 3 and 7 of IT-339R2. In this regard, we are attaching a copy of an extract from the speech given by B.W. Dath on June 20, 1991, at the Corporate Management Tax Conference, which outlines the concerns the Department has with respect to self-administered PHSP's. That being said, provided that a particular DRDP qualifies as a PHSP, it is our view that reasonable expenses incurred by an employer in reimbursing employees' dental expenses would be deductible in computing business income and, by virtue of the exception set out in subparagraph 6(1)(a)(i), would not be included in the employees' income as a taxable benefit.

In response to your concluding question, it is our view that an employee's continued eligibility under a DRDP would not be adversely affected because the employee was out of pocket with respect to a particular expense.