As the controversy surrounding certain senators’ expenses swirls in Ottawa, what better to time than now to post a reminder of the rules regarding claiming travel expenses as a tax deduction.
For those operating sole proprietorships or partnerships, you can deduct travel expenses you incur to earn business income. Travel expenses include:
- Public transportation fares
- Hotel accommodations
Be aware, of course, that a 50% limit applies to the cost of meals and entertainment.
If you are a salaried employee, the 50% limit also applies. Additionally, you must meet all 4 of these conditions:
- You were normally required to work away from your employers’ place of business
- Under your employment contract, you had to pay your own travelling expenses
- You did not receive a non-taxable allowance for travelling expenses
- You keep a copy of Form T220, Declaration of Condition of Employment
If you are a long-haul trucker, meal expenses are deductible at a higher rate than the aforementioned 50%. For 2012, the rate is 80%.
For more handy tips for your income tax preparation, download the free e-book — 7 Big Mistakes Small Business Owners Make at Tax Time.