Guidelines For Deducting Conference and Training Expenses

Attending conferences and investing in ongoing training can be a great way for small business owners to keep current on industry developments and improve their skills.  It also allows for networking opportunities and occasionally includes trips to exotic locations (and Las Vegas), which can be a nice break.  The best part is that the cost of both the events and travel are deductible against your business income, subject to specific guidelines discussed below.

 

Conferences/Conventions/Seminars:

Only 2 events per year are deductible.

Per IT-131R2 The conventions must be:

  • (a) held by a business or professional organization,
  • (b) attended in connection with the taxpayer's business or professional practice, and
  • (c) held at a location that may reasonably be regarded as consistent with the territorial scope of the organization.
  • It is not necessary that the taxpayer be a member of the organization sponsoring the convention but attendance at the convention must be related to the business or professional practice carried on by the taxpayer. A convention may be defined as a formal meeting of members for professional or business purposes. 

The events must be held within the “territorial scope” of the sponsoring organizations.   Territorial scope refers to the geographical area where the organization normally conducts its operations.  eg the Canadian Institute of Chartered Accountants would have to hold the qualifying event somewhere in Canada otherwise the deduction might be denied.

There is an exception with respect to conventions, held in the United States, that are “national in character” which are allowable as a business expense.

When a convention is combined with a vacation there should be a reasonable allocation of personal expenses relating to the trip including all expenses relating to spouses and children. 

There are specific restrictions with respect to food, which can be found at part 5 of IT-131R2

The rules above also apply to corporations.  Corporations maysend more than one person to a convention.  Also, where a corporation has different divisions, the limit of 2 conventions applies to each division. Finally intra company events are not considered to be conventions and as such do not count towards the limit.  Instead these are considered to be training (discussed below)

Training Expenses:

There is a specific distinction between capital and current expenditures as they relate to training.  (A capital expenditure, similar to purchases of computer equipment, machinery or goodwill, is essentially an outlay that has a lasting benefit).  In order to be deductible it must relate to the business of the self employed/small business owner.  A training expense that is capital in nature would be one where the business owner acquires an entirely new skill eg. A lawyer who takes courses on web development or a professor who wants to become a licensed real estate broker.

Conversely, training that merely upgrades or enhances an already existing skill will qualify as a current expenditure and is fully deductible in the year in which it is incurred.  Eg. An accountant who takes courses on a specific area in tax or a programmer who decides to learn a complementary programming language.

As with all tax deductible expenses, the amounts claimed must be reasonable.  In making this determination the location of the training and its duration are both taken into consideration.  A course taken internationally will be considered to be unreasonable if the same course costs less at home.  (be wary of claiming courses in Hawaii or other recognized holiday areas)  With respect to duration, 2-3 weeks is usually reasonable for full time training courses, although these can be exceeded when offered by an professional association or when completed towards professional development requirements (for doctors, accountants etc.)

Expenses for days when no training is offered are not deductible, except weekends where the training continues into the following week and it wouldn’t make sense to leave and come back.

Finally training courses should be distinguished from conventions.  The former generally takes place in a classroom format with textbooks and instructors while the latter does not require study or mandatory participation. 

All business owners, to the extent possible, should take advantage of conferences, seminars and training as they relate to their businesses for the purposes of professional development, networking and gaining new perspectives while escaping the daily grind.  Just make sure that it is deductible.