trip to Winnipeg or Jamaica to look at property -

My question is: Canadian-specific

QUESTION: I recently took a trip to Winnipeg to view property. My costs were flight, car rental,gas, food, entertainment, etc... I am planning on more trips like that one, so how do I organize my costs and reciepts? Is it better to just have categories like food, tracel, accomadation, etc.... and put all reciets from different trips together, or should I keep each trip seperate, and keep the costs specific to each trip?

Thanks for your time.

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david ingram replies:


A trip to Jamaica, Hawaii, the Canary Islands or Fiji to look at property is NOT deductible.

Neither is a trip to Winnipeg, Halifax, Toronto, Vancouver or Whitehorse.

Think of it another way.  If you had $1,000,000 in a safe deposit box in Toronto and went there to take money out of it, would you think you could deduct the cost of the trip.

If you 'do' buy something, then I have no problem with your adding the cost of the trip to the cost of the purchase which means that it would increase the adjusted cost base but it is not deductible from general revenue in the ordinary cost of business.

We just had the same thing with a person who traveled to a lot of places to investigate buying a cafe and eventually bought one.  He tried to write off all the exploratory trips to different cities and was turned down by the CRA.

And just before that, we had the same situation with a person who had traveled to several places looking to buy a jewelry store.  Turned down for all of the trips that he had taken with no purchase and allowed to capitalize the one where he bought the business. 
Unfortunately, a couple of the 'nothing down' seminars still talk about taking a tax deductible trip to Jamaica to look at property.  I assure you that the trips are not deductible.

And, if you do buy that property to rent out in Jamaica, Hawaii or Halifax, a trip there every year or two to look at it is NOT deductible either.  This is a place where people do deduct their annual trip to Hawaii and then get a rude tax shock when the IRS or CRA re-assesses them for three years back.  The really rude part is that they spent more than they would usually spend because they thought it was 'tax deductible'.

The US and the IRS is different.  If you do make that trip to Hawaii because of a need to deal with the rental house, the IRS will allow the deduction if you did not occupy the house. If you did stay there while spending 5 days cleaning, painting and repairing (and can prove that), you would likely get the deduction as well.
Canada is the worst at this though.  'I' personally lost the plane tripes to my Beverly Hills Office back int he 70's and 80's in a thirty day court trail before the Tax Court of Canada.  Even though, a typical trip   involved flying from Toronto to LA, working for a day and flying to Vancouver the same night, 'de judge' turned down the LA flights with a silly comment about 'the Canadian Tax Payers not needing to pay for my trips to sunny climes.'

It was work, work, work but Judge Mogan just did not get it.

He allowed the flights from Vancouver to Toronto, Toronto to Ottawa, Ottawa to Toronto and disallowed Toronto to LA and LA to Vancouver.

And all trips were to operating offices.  Although I do not own them anymore the Three offices still exist although the #10 Toronto street office is no longer in that location.  The #10 Toronto Street Office is 'sort of' in the limelight right now as well.  It was a smallish building better known as the world headquarters of Conrad Black who is on trial in Chicago and is the building that they show him moving his files out of.

So a little personal stuff, a little history, and a little association all to say that the exploratory trip is not deductible in either country even though I see people on a regular basis who have been deducting their annual trip to Hawaii to 'look at' their vacation property.

I won't deduct the annual trip although where there is a two or three day trip because of an emergency where physical presence is desirable such as after a hurricane.
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david ingram wrote:
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Disclaimer:  This question has been answered without detailed information or consultation and is to be regarded only as general comment.   Nothing in this message is or should be construed as advice in any particular circumstances. No contract exists between the reader and the author and any and all non-contractual duties are expressly denied. All readers should obtain formal advice from a competent and appropriately qualified legal practitioner or tax specialist for expert help, assistance, preparation, or consultation  in connection with personal or business affairs such as at www.centa.com. If you forward this message, this disclaimer must be included."
 
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Phone consultations are $400 for 15 minutes to 50 minutes (professional hour). Please note that GST is added if product remains in Canada or a phone consultation is in Canada.
 
This is not intended to be definitive but in general I am quoting $800 to $2,800 for a dual country tax return.
 
$800 would be one T4 slip one W2 slip one or two interest slips and you lived in one country only - no self employment or rentals or capital gains - you did not move into or out of the country in this year.
 
$1,000 would be the same with one rental
 
$1,200 would be the same with one business no rental
 
$1,200 would be the minimum with a move in or out of the country. These are complicated because of the back and forth foreign tax credits. - The IRS says a foreign tax credit takes 1 hour and 53 minutes.
 
$1,500 would be the minimum with a rental or two in the country you do not live in or a rental and a business and foreign tax credits  no move in or out
 
$1,600 would be for two people with income from two countries

$2,800 would be all of the above and you moved in and out of the country.
 
This is just a guideline for US / Canadian returns
 
We will still prepare Canadian only (lives in Canada, no US connection period) with two or three slips and no capital gains, etc. for $150.00 up.
 
With a Rental for $350
 
A Business for $350 - Rental and business likely $450
And an American only (lives in the US with no Canadian income or filing period) with about the same things in the same range with a little bit more if there is a state return.
 
Moving in or out of the country or part year earnings in the US will ALWAYS be $800 and up.
 
TDF 90-22.1 forms are $50 for the first and $25.00 each after that when part of a tax return.
 
8891 forms are generally $50.00 to $100.00 each.
 
18 RRSPs would be $900.00 - (maybe amalgamate a couple)
 
Capital gains *sales)  are likely $50.00 for the first and $20.00 each after that.
 
Just a guideline not etched in stone. 
 
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