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Simplify Your Small Business Convention Expense

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Image of a business team applauding in the sign of approvalSpecific rules about which travel and entertainment expenses are deductible in relation to conventions can make complying with the tax code seem like working through a giant hairball.  Convention expenses are some of the most important for small businesses, but If you don’t understand and follow the rules, you can miss out on getting deductions for legitimate expenses.

CRUISES: For instance, if  you live in Canada, claiming expenses for a cruise in not accepted as a business expense, IT- 131R2.

According to FBC, Canada’s Farm & Small Business Tax Specialist,

CRA definitely will not accept expenses for a national convention held on an ocean cruise ship. Even if the ship travels between Canadian and U.S. cities or 2 U.S. cities the convention is deemed to be outside North America, and therefore not allowable.

In the United States there is a daily limit in relation to your convention expenses.   It’s acceptable to deduct up to $2,000 for conventions directly related to your trade that are held on U.S. cruise ships.  Pub 463 IRS.  However, you’ll need to submit a written statement that includes the number of days of the trip, the number of hours each day that you devoted to scheduled business activities, and a program of the scheduled business activities of the meeting to the IRS. You will also need an officer of the group that is sponsoring the meeting to submit a statement detailing business activities that took place and the number of hours that you attended them.

CONVENTIONS:  In Canada, IT- 131R2  you can deduct the costs of attending up to 2 conventions in any given year.  Canada Revenue Agency defines A “Convention” is defined as an event that is held by a business or professional organization, attended in connection with your business, and is held at a location that may reasonably be regarded as consistent with the territorial scope of the organization.

  • The rules here are quite specific, but generally, if the organization hosting the convention is “national” in character, the convention can be located in Canada or the USA to qualify;
  • Training courses are not conventions, and costs are deductible subject to the Business and Evidence Tests. The location for the course must be reasonable in the circumstances.  According to Canada Revenue Agency, “Costs incurred in connection with attending a convention or a business meeting can receive different tax treatment from the costs of attending a training course. A distinction should therefore be made between a training course and a convention or a business meeting.” IT-357R2

In the United States, according to the Tax Center Biz Filings, you can deduct your travel convention expenses (including travel, lodging, and meals for yourself) when you attend a convention within the United States if you can show that attending the convention benefits your business. These rules apply to workshops, conferences and seminars, as well as actual conventions.

You can satisfy the business relationship test by showing that your business duties and responsibilities tie in to the program or agenda of the convention. The agenda doesn’t necessarily have to deal specifically with your duties or responsibilities – a tie-in is enough. You must, however, show some kind of income-producing purpose for attending the convention. In any case, you won’t be able to deduct any non-business expenses (sightseeing, for example) you incur while attending the convention.

In order to be able to deduct convention expenses for attending a convention outside the North American area, the convention must be directly related to your business and it must be as reasonable to hold the convention outside North America as in it. For example, it would be reasonable to hold the convention outside North America if many of the convention’s attendees lived overseas. You must also satisfy the requirements for deducting business travel expenses outside the U.S.

In a recent interview with H&R Block owner Darlene Lafond R.P.A., she explains that many of her clients as small business owners, who are not represented by a franchise or an association do not get the opportunity to attend a convention and when they do they do not optimize the convention expense opportunity that Canada Revenue Agency offers, to attend a second convention. Darlene goes on to say,

Dealing with 100’s of small businesses a year,  Convention Business Travel now provides me the opportunity to help optimize and support clients on several tax benefits.  Whether our client’s business has one or several business trips in the year, CBT can help support  their businesses to foster discussions to operate and grow, both on site and off-site.  Their agenda builder tool  provides my client the supporting documentation required  in relation to their travel expenses claims.

As with any tax strategy, the best way to avoid trouble regarding your convention expenses is to be honest about your intentions, deduct only the expenses you’re entitled to, and then keep all supporting documentation to back up those deductions. Penalties are serious if you can’t substantiate your claim; for example, you can end up losing that deduction and have to pay the additional tax, in addition to interest and penalties and possibly trigger an audit.


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