Professional Development and Continuing Education Expenses – Deductible or Not?
One of the key traits of a professional is a desire and need for regular professional development and continuing education. This training can involve some travel expenses as the courses are often centralized and even occasionally located somewhere that allows the professional to enjoy a vacation in the process. The resulting cost can be somewhat significant and while much of it may seem to relate to the training course, the full amount may not always be eligible as a tax deductible expense.
In general, costs that are personal in nature are not deductible for tax purposes and should be tracked separately from those which relate to the professional’s actual training costs. In addition, the Canada Revenue Agency (CRA) does not allow the deduction of expenses that are not considered reasonable. Here are some guidelines to consider when planning to incur these expenses.
Expense vs. Capital
There are different reasons a professional might take a training course. If a course is being taken to provide the professional with a new skill or qualification, it would be considered a capital item and is not eligible to be deducted as a current expense. However, courses taken to maintain, update or upgrade an already existing skill or qualification may be eligible for a deduction.
Costs of Training
The CRA does allow for the deduction of more than just the specific course itself. Accommodations, travel (including flights, taxis, etc.), and 50% of meals can also be deducted, provided they are incurred during the actual days of training or are on the days of arrival and departure. This would also include reasonable costs incurred on the weekend that might fall in the middle of multiple weeks of training, and where it is not feasible to return home during that time. Any costs incurred on non-training days would not be eligible for a tax deduction.
Continuing education and training courses are often in locations that are also popular vacation spots. However, costs for a course taken at a distant location or at a location outside the territorial limits of the professional organization would be considered unreasonable by the CRA if that same course was offered locally at a smaller cost. Additionally, if the course taken in a recognized holiday area was for a short duration compared to the length of a personal holiday taken during the same trip, a portion of the costs incurred will also be considered non-deductible.
Full-time training courses generally do not exceed a period of two or three weeks. Those that are longer may still be allowable as a deductible expense, provided the course is sponsored or accepted by the professional association to maintain the professional standards of its members. It should be noted, however, that the total time taken in attending courses in any one year should not be so great that it affects the professional’s ability to carry on his or her business or profession for a significant part of the year.
Only costs for the actual attendees of the training course may be deducted for tax purposes. All expenses incurred by accompanying spouses or children would be personal and therefore not deductible.
Training vs. Convention
It should be noted that the CRA distinguishes a training course from a convention, which is described as a formal meeting of members of an organization or association for professional or business purposes. Typically there is no formal training at a convention, although learning may occur through various interactions and seminars. The previously mentioned deductibility guidelines are only applicable for training courses.
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