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.
Ms. Carol Muirhead, Section Head Non-resident, Business and Property Income Section Non-corporate Rulings Directorate Revenue Canada, Taxation 875 Heron Road Ottawa, Ontario K1A 0L8
Dear Ms. Muirhead:
We are writing to request your interpretation of the impact of the Canada-United States Income Tax Convention, 1980 on the deductibility of convention expenses incurred by a taxpayer resident in Canada in attending a convention held in the United States.
Subsection 20(10) of the Income Tax Act permits a deduction in computing a taxpayer's income from a business for amounts paid by the taxpayer as or on account of expenses incurred in attending, in connection with the business, not more than two conventions held during the year by a business or professional organization at a location that may reasonably be regarded as consistent with the territorial scope of that organization.
Paragraph 9 of Article XXV of the Canada-United States Income Tax Convention, 1980 provides that expenses incurred by a citizen or resident of Canada with respect to any convention (including any seminar, meeting, congress or other function of a similar nature) held in the United States shall, for the purposes of taxation in Canada, be deductible to the same extent that such expenses would be deductible if the convention were held in Canada.
It is our view that Paragraph 9 of Article XXV of the Canada-United States Income Tax Convention has the effect of bringing the entire United States within the territorial scope of a business or professional organization in Canada. As a result, if the taxpayer meets the requirements in paragraph 20(10) that the expenses be incurred by the taxpayer and that the attendance at the convention be in connection with the taxpayer's business, he should be entitled to deduct expenses incurred to attend a convention held by a Canadian organization anywhere in the United States.
For example, it is our view that if an association of Nova Scotia general insurance agents were to hold a business meeting or convention in Florida, expenses incurred by member companies in sending employees to the convention should be deductible under Subsection 20(10). However, if the same Nova Scotian association were to hold a convention in Ontario, without any affiliation or joint activities with an Ontario or national organization of insurance agents, members attending the convention would not be entitled to deduct expenses incurred to attend the convention because Ontario is outside the territorial scope of the Nova Scotia association.
We would appreciate your comments on our interpretation of the above provisions.
Yours faithfully,
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