Summer is the time when many people take holidays with family and friends. For business people, there’s always that question, ‘can I write this trip off?’ The answer, as it is with any tax question, is ‘depends’. There are factors to consider before you may be able to write that trip off. Is it truly a legitimate business trip? Does it just happen to coincide with a family trip? Who’s going on the trip? Are your staff going too?
Is It Truly a Legitimate Business Trip?
This is the question. Are you taking that trip to France to seek potential business or see a new supplier? Or, is it really your anniversary present to your spouse? If the trip is business, and you just coordinated it to work with your anniversary, that’s okay. As long as the main purpose of the trip is business, you can write off most of the trip.
How much can you write off? For travel expenses, you can deduct air travel, accommodations, car rentals and its gas, taxis or public transit fares, food (only 50% or 100% if you’re getting reimbursed from a client), and entertainment you take a client to, such as concert/theatre tickets or sporting events. For such expenses, you cannot use the portion that would be for your spouse or children, unless your spouse or your children work for your company.
Does your business trip include days where you’re not conducting any business? If yes, then you can only write off the days where you’re conducting business; it doesn’t have to be a full day of business though, as long as it’s more than 2 hours that’s business. Your spouse should be attending these meetings too, or conducting her how business meetings; it’s a stretch but the spouses of all those you’re meeting with your wife could be considered business.
For example, you go on a trip to Europe to conduct business, taking your spouse and children along; your spouse works with you in the business, not the children. The trip lasts 18 days, and of that time you can determine that 8 days were actually for business, the other 10 days were personal. You have to take your travel expenses and claim 8/18th of those expenses. The amounts presented here were converted into Canadian dollars.
Air Travel (you and spouse) $2,150
Transportation charges $ 765
Hotel (you and spouse) $5,400
Deductible portion 8/18 $2,740
Meals / Entertainment (50%) $1,230
Total Travel Expenses $3,970
We kept meals and entertainment separate as only the meals where you conduct business are allowed. And, some meals and entertainment may have happened on a non-business day as you took a client out to the theatre or dinner.
Working your business schedule around holiday time is not a bad idea, and if you travel a lot for business, it completely makes sense to have family holidays at the same time. If you’re going to Europe you may as well make the best of it.
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