Travel Expense
Business travel costs (transportation, lodging, incidentals) are fully deductible, while meals on travel remain subject to the 50% limit and conventions are capped at two per year.
Definition
Travel expense is the cost of transportation, lodging, and incidentals incurred to earn business income away from the regular place of business. The general s.18(1)(a) purpose test governs, and specific statutory rules carve out meals and conventions. The portion of any trip attributable to personal activities (sightseeing, tacking on vacation days) is not deductible.
Key rules
- Transportation: air, rail, taxi, rideshare, and rental car costs are fully deductible when the trip is business-purpose.
- Lodging: hotel, short-term rental, and related taxes are fully deductible.
- Meals on travel (s.67.1): food and beverage costs incurred while travelling on business remain limited to 50%. Per diem allowances paid to employees follow the same 50% cap for the employer.
- Incidentals: baggage fees, business phone calls, Wi-Fi, laundry on extended trips, and tips are deductible.
- Conventions (s.20(10)): deductible for up to two conventions per year that are held within the geographic scope of the sponsoring organization. If the convention fee does not itemize meals, a $50 per day amount is deemed to be meals and further capped at 50%.
- Spouse or family accompaniment: the portion attributable to a non-business traveller is a personal expense (s.18(1)(h)) unless that person is also an employee with a bona fide business role.
- Cruise ships and foreign destinations: travel outside Canada for conventions must still meet the geographic-scope rule; cruise-ship conventions rarely qualify.
Build the business purpose into the itinerary. Agendas, client meeting notes, and registration confirmations turn a disallowed trip into an accepted deduction when CRA reviews the file.
Example
Fraser Valley Tech Inc. sends its CTO to a three-day SaaS conference in Toronto on September 8 to 10, 2026. Costs are: flights $820, hotel $960, registration $1,500 (fee includes one gala dinner that is not separately priced), ground transport $180, and on-trip meal receipts of $340.
This is the CTO's second convention of 2026 and falls within the sponsor's geographic area, so the s.20(10) two-convention rule is satisfied.
Common mistakes
- Expensing a vacation. Adding two business meetings to a week-long personal trip does not convert the trip into business travel.
- Treating convention fees as 100% deductible without extracting the deemed meals component when the invoice is silent.
- Forgetting to apply the 50% cap to travel meals.
- Including a spouse's flight and hotel when the spouse has no business role.
- Missing the third convention of the year. The third one is not deductible at all under s.20(10).
Related concepts
Authority
- Income Tax Act s.18(1)(a)
- Income Tax Act s.20(10)
- Income Tax Act s.67.1
See also
Related entries
Meals and Entertainment (50% Rule)
Business meals and entertainment are generally limited to a 50% deduction under ITA s.67.1, with documented business purpose and a short list of 100% exceptions.
Vehicle Expense
Motor vehicle costs are deductible on the business-use share established by a logbook, with passenger vehicle ceilings on capital cost, interest, and lease payments.
Business Expense Principle (ITA 18)
An outlay is deductible only if it is incurred for the purpose of gaining or producing income from a business or property and is not a personal or capital expense.
Non-Deductible Expenses
A consolidated list of outlays that ITA s.18 and related sections prohibit from current deduction: personal, capital, fines, club dues, life insurance, and the 50% meals portion.
This entry is for general reference. It does not constitute professional tax advice. Consult a qualified Canadian accountant for your specific situation.