Canadian Meetings at Sea
Tax Deductibility for Canadian Meetings & Conventions
Canada, like most countries has specific laws dealing with tax deductibility of expenses for meetings and conventions. This summarizes the deductibility restrictions under Canadian tax law regarding convention expenses, convention being defined as a formal meeting of members for professional or business purposes. However, the taxpayer's membership in the organization sponsoring the convention is not required, only a valid business purpose for attending.
Expenses for not more than two conventions in any year may be deducted, although corporations with diversified business interests may apply the two convention limit to each separate business interest. Spousal or family member expenses are specifically nondeductible unless there is a business purpose for their accompaniment.
The amount that may be deducted for convention expenses allocable to food, beverages and entertainment is limited to 80 percent of reasonable expenses. If the organizer of the convention does not identify a reasonable portion (based on cost) of the convention fee allocable to food, beverages and entertainment, $50 per day is deemed to be the amount paid for food, beverages and entertainment. Incidental beverages and refreshments made available during the course of meetings or receptions, such as juice, coffee, doughnuts and muffins, are not taken into account.
The most potentially restrictive limitation is that the convention must be held at a location that may reasonably be regarded as consistent with the territorial scope of the sponsoring organization. Territorial scope refers to the geographical area in which the particular sponsoring organization ordinarily conducts its business. This generally requires theta convention sponsored by a Canadian business or professional organization be held in Canada for a national organization or in a particular province, municipality or other area for a regional organization.
Consequently, expenses incurred in attending a convention held outside the geographical limits of the sponsoring Canadian organization will normally not be deductible.
A convention held during an ocean cruise is specifically considered as being outside Canada. However, there are other aspects which may allow deductibility of valid expenses.
The U.S.-Canada Treaty allows expenses for attending a convention held in the United States by a national Canadian organization to be deductible to the same extent that they would be had the convention been held in Canada. This Treaty exception is not applicable to Canadian organizations that are not national in character, i.e., regional organizations.
For advice you can bank on, contact attorney Jonathan T. Howe, Esq. whose practice includes specialization in tax related issues to meetings and incentives. He is legal counsel for Meeting Professionals International, International Special Events Society and others in the travel and hospitality industry. He also serves as special advisor to the American Bar Association Standing Committee on Meetings & Travel and is the President of the Academy of Hospitality Industry Attorneys. For a reasonable fee he can advise you, too. He is at the law firm of Howe & Hutton, Ltd., 20 N. Wacker Drive, Suite 4200, Chicago IL 60030 at (312) 263-3001 or at firstname.lastname@example.org. He also has offices in St. Louis and Washington DC.
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