Travel expenses can be a substantial cost of doing business for many entrepreneurs. But ensuring your company deducts as much as possible of the travel expenses you and your employees incur can help control those costs.
Business expenses are usually tax-deductible in the hands of a company as long as they are incurred to earn income for the business and are reasonable in the circumstances. Travel expenses are included in this general rule, but some special rules apply.
For example, the fare for a taxi or public transit to the airport, when travelling to another city to meet with clients can be deducted by your business. The cost of your flight (or train or bus ticket) and your hotel also is fully deductible for your company but food, beverages and entertainment paid for during your trip are only 50% deductible, including the cost of meals and entertainment spent on clients as part of a business meeting. Entertainment can include a range of expenses such as taking clients to a theatre, concert or sports event or renting a hospitality suite.
The company should also claim input tax credits for GST/HST paid on travel expenses, and the 50% restriction also applies for claiming taxes paid on meals and entertainment.
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