Principal Issues: What are the criteria for the deductibility of convention expenses?
Position: General criteria provided.
Reasons: General comments.
August 14, 2007
XXXXXXXXXX
Dear XXXXXXXXXX:
I am writing in reply to the email you sent to the Honourable James M. Flaherty, Minister of Finance, concerning the deductibility of convention expenses for self-employed individuals. I received a copy of your email from Minister Flaherty's office on May 29, 2007. I apologize for the delay in responding.
Subsection 20(10) of the Income Tax Act permits a self-employed taxpayer who is carrying on a business or practising a profession to deduct, in computing income for a tax year from a business, expenses incurred in attending not more than two conventions a year provided that the conventions were:
(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.
With respect to holding conventions outside of Canada, as noted above, one of the requirements of subsection 20(10) of the Act is that the location be reasonably regarded as consistent with the territorial scope of the organization holding the convention. In this regard, if your organization is a national one, then pursuant to Article XXV.9 of the Canada-U.S. Tax Convention, its territorial scope is considered to include the United States for purposes of deducting convention expenses.
General information about the rules applicable to convention expenses can be found in Interpretation Bulletin IT-131R2, Convention Expenses, which is available on the Canada Revenue Agency Web site at www.cra.gc.ca/E/pub/tp/it131r2/README.html.
I trust that the information I have provided is helpful.
Sincerely,
The Honourable Carol Skelton, P.C., M.P.
Shaun Harkin
957-9229
2007-023951