Gwynn Scheltema
It’s that time of year we all look forward to….taxes!
As a tax preparer at an accounting office, I have noticed that over the last couple of years, Canada Revenue Agency (CRA) has been paying attention to convention expenses claimed, so I thought it might be useful to all you writers out there to spend a little time discussing writing conferences from a tax perspective.
That said, a caveat: The information and tips offered here are general information only. Your tax situation could be influenced by other factors not dealt with here, so if you are at all in doubt, contact your accountant or check out CRA’s website for more information.
Convention expenses
Let’s pretend that you attended a convention in Toronto, one in the Caribbean and one in USA in 2018. Can you deduct them on your tax return?
Like most tax questions, the answer is “maybe”.
What does CRA say?
“You can deduct the cost of attending up to two conventions a year. The conventions have to meet the following conditions:
- relate to your business or your professional activity
- be held by a business or professional organization within the geographical area where the organization normally conducts its business”
Business or professional activity
Let’s unpack point #1: it must relate to your “business” or your “professional activity”.
Professional activity refers to income earned from a profession that is regulated by a governing body (sets rules of compliance, etc.). Typically profession refers to accountants, lawyers, doctors and the like.
For writers, the operative word here is “business”. Being in business as a writer means you have gone beyond being a “hobbyist”.
Generally, a business is any undertaking that results in profits or has a reasonable expectation of profits within a reasonable time. CRA, however, does recognize that the nature of art and literature is such that “in the case of artists and writers it is recognized that a longer period of time may be required in establishing that such reasonable expectation does exist.”
To determine if you are running a writing small business or if you are a hobbyist, CRA considers 12 factors that speak to reasonableness of profit expectation. Factors include the amount of time devoted to writing, representation by an agent or publisher, the extent to which your work is presented to the public, promotion of your work and the kind of income derived (royalties, grants, etc.). You can check out the full list at the link at the end of this post.
Geographical area
Unpacking point #2: “within the geographical area where the organization normally conducts its business”
As nice as it might be, travelling to a far-flung exotic location for a conference may render the expense of it non-deductible. It all depends on whether a location is within the territorial scope of the sponsoring organization. For instance, The Ontario Writers’ Conference would be expected to hold its convention in Ontario. The Writers’ Union of Canada could hold it anywhere in Canada. Romance Writers of America although head quartered in USA, might hold a conference anywhere in the world that it has RWA branches.
Fortunately, under the Canada-United States Tax Convention, expenses incurred by a Canadian resident or citizen attending conventions held in the USA are treated as if the conventions were held in Canada.
CRA definitely will not accept expenses for conventions held on cruise ships, even if the ship travels between Canadian and US ports or two US. ports. Why? Because the sea is considered international territory.
What can you write off?
Presuming you (and the convention) qualify under the two points mentioned above, you can deduct:
- Convention fees
- Travel expenses
- Lodging expenses
- Meals to a limit of $50/day
If the convention fees include the cost of food, beverages, or entertainment, but do not show it separately, you are required to deduct $50 for each day from the convention fee and claim it separately as meals and entertainment (where other limits will apply).
Example
Convention costs are $500 for 2 days, meals included.
Subtracting $50/day for meals makes the adjusted convention fee $500 ‑ ($50 x 2) = $400.
Additionally, claim the $100 meals and it will be subject to the usual 50% limitation, and end up as a $50 deduction.
Note: Incidental items such as coffee and doughnuts available at convention meetings or receptions do not count as meals.
Up to two conventions
So what about your three writers’ conference I mentioned earlier? Okay, so right off the bat, you are limited to two. Assuming all three qualify as allowable conventions, use the ones most advantageous to you. Those might be the most expensive, or if one of them is not closely related to your writing activities, you may be safer to go with the two cheaper ones that are.
Useful links:
- Interpretation Bulletin IT-131R2, Convention Expenses
- Interpretation Bulletin IT-504R2 Business vs. Hobby Writer
- Meals and entertainment
- Form T2125, Statement of Business or Professional Activities
- Guide T4002, Self-employed Business, Professional, Commission, Farming, and Fishing Income
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