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Does Travel + Continuing Education = Tax Writeoff for Dentists?

By April 11, 2013December 14th, 2021Corporate

What dentist wouldn’t want to combine getting continuing education courses, traveling somewhere exotic, and expensing the whole thing for tax purposes?  The dentist taxpayer believes that the amounts they’ve spent were incurred for legitimate business reasons and therefore can be used to reduce their taxable income and income taxes payable.  But is that true?   Is it legal?  Well, there are a number of laws that COULD apply to this situation.  And the laws are NOT ALWAYS clear.  So without further adieu, let’s get into it, shall we?

Section 18: Deducting Business Expenses Generally

The first general limitation on deducting expenses comes from section 18 of the Income Taxt Act.  That section imposes two (2) very important limitations on a taxpayer’s ability to deduct costs related to a business.

First, section 18(1)(a) says that a taxpayer cannot deduct an expense related to a business unless that expense was “made or incurred by the taxpayer for the purpose of gaining or producing income from the business”.  In other words, expenses incurred for personal reasons (e.g. leisure, recreation, socializing, etc.) are not deductible.

Second, section 18(1)(b) says that a taxpayer cannot deduct an expense that is a “capital outlay or loss” against their business income.  So an expense incurred to acquire or develop a long-standing benefit (e.g. skill, network connection, knowledge, qualification, etc.) is not a deductible expense against business income.

Bad Law: Griffith Case

Now it is time to review a bad decision that dealt with these laws in the context of a doctor trying to deduct expenses incurred for attending a convention.  In the case of H. Griffith v. M.N.R., [1956] C.T.C. 47, the Exchequer Court of Canada held that convention expenses incurred by a professional person COULD NOT be considered to have been incurred for the purposes of earning income and, as such, were disallowed.  In that case, the taxpayer – a medical doctor specializing in the field of anesthesia and one of the outstanding specialists in that field – had deducted expenses incurred for attending conventions at which he delivered addresses and presented lectures.  The deduction was disallowed on the basis that the expenses were not incurred for the purposes of earning income.  The Court agreed with the government and disallowed the expense on the basis that the expenses were not incurred with the object of obtaining actual or immediate gain or profit, but were rather “of a capital nature” and, as such, not deductible under (what was at the time) sections 18(1)(a) and (b) of the Income Tax Act.

The Courts Partially Reject Griffith!

NOW THANKFULLY, the Exchequer Court’s decision in the Griffith case concerning section 18(1)(a) of the Income Tax Act has since been rejected. As the Tax Court stated in Shaver v. Canada [2004] T.C.J. No. 3:

29     However, the restrictive approach taken by the Exchequer Court with respect to paragraph 18(1)(a) of the Act has since been rejected by the courts.  An expense may thus be incurred for the purpose of gaining or producing income from a source referred to in paragraph 18(1)(a) of the Act, even though it is not incurred with the object of obtaining actual or immediate gain or profit. As long as an activity is undertaken by a taxpayer in pursuit of profit and it is not a personal endeavour, there is a source of income and the profitability of the activity to which the expense relates does not affect the deductibility of the expense if that expense is reasonable in the circumstances (see Stewart v. Canada, 2002 SCC 46, at paragraphs 51-58).

So we now have a more relaxed (or easier to meet) test when it comes to expenses incurred for the purpose of gaining or producing income: the expense must be undertaken in pursuit of profit and must not be a personal endeavour.  This is much easier to prove than what the Court in Griffith said (i.e. that an expense was incurred with the object of obtaining actual or immediate gain or profit).  So that eases up a dentist’s ability to deduct a convention expense with respect to section 18(1)(a) of the Income Tax Act. Basically, if they can show that expenses to attend a convention were incurred in pursuit of profit, then it would be fully deductible as a so-called “current expense” and not a “capital one”.

But what about section 18(1)(b)?  This whole non-deductibility of capital expenses thing?  What’s that all about?  Well, the idea is that, if an expense is incurred to obtain a long-term benefit, then it is a capital expense and therefore not deductible as against business income because of section 18(1)(b).  In Griffith, the Court found that the expenses incurred to attend business seminars were more like post-graduate courses in that those who attended them increased their knowledge and therefore the expenditures made by them were of a capital nature (i.e. long term benefit instead of a one time benefit).  Hence, they were not deductible.  In Graves (G) v. Canada, [1990] 1 C.T.C. 357 (F.C.T.D.), the Court found that the awareness gained by attending certain meetings was a CAPITAL ASSET, and therefore the deductibility of those expenses against business income was prohibited under section 18(1)(b).  Similarly, in Wees v. Canada, [1994] T.C.J. No. 1192 (Q.L.), and in Roche v. Canada, [1989] T.C.J. No. 105 (Q.L.), travel expenses incurred by Amway distributors to attend several Amway meetings were considered by the court as having been incurred to develop long-term assets and therefore as being capital expenses. As a result, they were denied under section 18(1)(b)!.

AND Section 20(10) comes to the rescue!

So is that it?  Does this mean that a dentist who incurs capital expenses to attend a convention and gains a capital asset (e.g. long-term skills, awareness, network connections, etc.) will not be able to deduct those capital expenses against their business income?  Well, not quite… thankfully, we have section 20(10) of the Act that gives SOME relief.  Here’s what it says:

Convention expenses

20 (10) Notwithstanding paragraph 18(a)(b), there may be deducted in computing a taxpayer’s income for a taxation year from a business an amount paid by the taxpayer in the year as or on account of expenses incurred by the taxpayer in attending, in connection with the business, not more than two conventions held during the year by a business or professional organization at a location that may reasonably be regarded as consistent with the territorial scope of that organization.

So even though section 18(1)(b) could be devastating (because it denies the deductibility of any capital expenses against business income), section 20(10) says that a taxpayer CAN deduct expenses incurred in connection with a business for attending up to two (2) CONVENTIONS per year.  Now, while that may seem to be the light at the end of the tunnel that we were all looking for, there are rules and restrictions built into section 20(10) that need to be reviewed in detail to understand when and to what extent those CONVENTION-related expenses can be deducted.


So by this point, the following statement should make absolute sense: In order for a taxpayer to be able to deduct an expense of any kind he /she must come within either section 18 (this section allows a taxpayer to deduct expenses that are incurred for the purpose of earning income) or section 20(10) (this section covers inter alia convention expenses, and a taxpayer is limited to two a year) of the Income Tax Act.  Now let’s get into section 20(10) in further detail shall we?


Who is eligible to use section 20(10)? What is the extent of the deductions that can be claimed?

Who is Eligible?

This deduction is only eligible for a self-employed taxpayer who is carrying on a business or practicing a profession.  So dentists would qualify 😉

What is a Convention?

When definition a “convention”, a few points are worth mentioning:

  • The word “convention” is not defined in the Income Tax Act.  Courts have relied upon dictionaries and commonsense to interpret the word “convention”.  For example, in Griffith, the Court said that conventions “are gatherings of people in the same calling, profession or trade who meet to discuss matters of common interest, exchange opinions on recent discoveries liable to affect their field of action and consider the problems raised by the constant evolution of science and the demands of modern living. These conventions make it possible for those who follow the discussions to acquire new knowledge, or at least to increase that they already have, thus putting them in a better position to meet the needs of those they have chosen to serve in their respective fields.”
  • The government has said that a convention is a formal meeting of members for professional or business purposes: see Income Tax Interpretation Bulletin, No. IT-131R2 (Date: November 24, 1989), “Convention Expenses”.
  • In  Graves v. M.N.R., [1990] F.C.J. No. 277, the Court held that: “It is my opinion that whether or not the meeting or conference can be a convention within section 20(10) depends upon an assessment of the nature of the meeting and its relationship to the taxpayer’s business rather than upon the particular standing of the taxpayer or his status in relation to others who may attend.”
  • In Spectron Computer Corp. v. Canada (Minister of National Revenue), [1993] T.C.J. No. 700, the Court held that “if any assembly or gathering portrays a commonality of purpose… and a commonality of participants … it will, prima facie, be a convention”.
  • Conventions (an assembly of persons for a common purpose) can be distinguished from a conference (a formal interchange of views or meeting of two or more persons for discussing matters of common concerns).  Conventions will include conferences, but the reverse is not necessarily true.
  • In Shaver v. Canada, [2004] T.C.J. No. 3, the Court noted the distinction between training costs and costs incurred in connection with attending a convention as per Interpretation Bulletin IT-357R2.  In that bulletin, it is explained that some training costs are deductible as current expenses if they are not capital in nature. Expenses are considered to be capital in nature where the training results in a lasting benefit to the taxpayer, i.e. where a new skill or qualification is acquired. Where, on the other hand, the training is taken merely to maintain, update or upgrade an already existing skill or qualification, the related costs are NOT considered to be capital in nature (and may be deducted against business income). The distinction between a training course and a convention and between a training course and business meetings is made in paragraphs 9 and 10 of IT-357R2 as follows:

9. A training course should be distinguished from a convention, which may be described as a formal meeting of members of an organization or association for professional or business purposes. Unlike a training course which generally has a classroom format for teaching a subject in accordance with a formal course of study, a convention does not normally have a classroom format and those attending are normally not expected to study text-books, prepare assignments or take tests. A convention does not become a training course when some of its sessions take the form of workshops. It is a question of fact whether a “seminar” is a convention or a training course. While conventions usually result in the acquisition of knowledge by those attending them, the deduction of convention expenses is specifically covered by subsection 20(10) and is subject to the limitations contained in the provisions of that subsection (see the current version of IT-131).

10. A training course should also be distinguished from a meeting of a group of employees or owners of a business where no formal training occurs. An employer’s costs incurred in connection with employee meetings of this nature are usually allowable, as are costs of similar meetings of the owners of a business, provided that such costs are reasonable in the circumstances and are incurred for the purpose of carrying on the business.

So now you should have a better idea of what a convention is.  And section 20(10) allows deductions for expenses incurred by dentists in attending a convention.  But there is also a territorial restriction that needs to be addressed.

Conventions in Exotic Locations

A taxpayer will only be able to use section 20(10) if the conventions are held by a business or organization at a location that may be reasonably regarded as consistent with the territorial scope of that business or organization.  So what about conventions that occur in exotic locations abroad?  Well, that’s where we need clarification in respect of the term “territorial scope”.  The aforementioned government Interpretation Bulletin has the following to say in this regard:

The term “territorial scope” refers to the geographical area in which the particular organization ordinarily conducts its activities. Accordingly, this generally requires that a convention sponsored by a Canadian business or professional organization be held in Canada where the organization is national in character, or in the particular province, municipality or other area in Canada where the activities of the organization are limited to such an area. Consequently, expenses incurred in attending a convention held outside the geographical limits of the sponsoring Canadian organization will normally not be deductible in computing income and, for this purpose, a convention held during an ocean cruise is considered as being held outside Canada.

If the business that is organizing the convention is international in scope (i.e. no discernible territorial limits or geographical boundaries) and whose main purpose and function is to promote, organize and manage conventions, then that would arguably be OK under section 20(10).

Limitations on Deductability of Expenses

Now, even though section 20(10) of the Income Tax Act allows deductions for convention expenses, it’s not a free-for-all.  That section is subject to additional restrictions found in section 67 and 67.1(1) of the Income Tax Act.

Section 67 says that: “In computing income, no deduction shall be made in respect of an outlay or expense in respect of which any amount is otherwise deductible under this Act, except to the extent that the outlay or expense was reasonable in the circumstances.”  This basically means that the expense must be REASONABLE in the circumstances.

Section 67.1(1) of the Income Tax Act says that business expenses related to meals and entertainment will only be 50% of the lesser of what was paid or what reasonably should have been paid in the circumstances.  So meals and entertainment are not 100% deductible.  That’s the starting position.  But then section 67.1(3) goes on to say that, with respect to conferences / conventions / seminars or similar events, if the amount that is paid for meals and entertainment cannot be identified (e.g. because it’s an all inclusive price that was paid), then the taxpayer will only be able to deduct up to $50 per deal for meals and entertainment.  Thus, $25 per day of the convention fee becomes non-deductible.  And the fee for the event shall be deemed to be the actual amount paid minus the amount deducted for meals and entertainment.

Finally, the Interpretation Bullet says the following about combining a vacation with a convention:

5. A taxpayer who combines attendance at a convention, wherever it is held, with a vacation trip must allocate expenses on some reasonable basis to eliminate those that are essentially for vacation purposes. A reasonable basis is considered to be one that allows the taxpayer to deduct the cost of travel (i.e., transportation and necessary meals and accommodation en route) from the taxpayer’s place of business to the convention and back by the most direct route available, and the costs and accommodation while participating in the convention. All such costs must be reasonable as required by section 67 and are subject to the restrictions in section 67.1.

6. It should be noted that expenses incurred by or for a spouse or children accompanying the taxpayer to a convention or a combined convention and vacation trip are normally considered to be personal and, as such, are not deductible.

Hmmm… So, overall, there appear to be a number of restrictions on dentists looking to write off traveling with their families abroad to attend a convention.

Caselaw Concerning Conventions

Now that we have a better sense of section 18(1)(a), 18(1)(b) and section 20(10) of the Income Tax Act, it’s time to see those sections in action… and interestingly enough, practically all of these cases have to deal with Amway distributors trying to deduct expenses for conventions and other trips…

In David N. Rovan (Appellant) v. The Minister of National Revenue (Respondent) (1986), 86 DTC 1791, the taxpayer was a partner in a law firm. At the end of April 1980, he attended a seminar in Monte Carlo in the Principality of Monaco. The topics discussed at the seminar were condominium law, criminal law and family law, and the participants were from both Europe and Canada. The taxpayer was engaged in a general practice of law with the taxpayer’s main areas being family, criminal and real estate law. The seminar fee included accommodation for six nights even though the seminar involved at most 12 hours of lectures over three days. The organization conducting the seminar had previously held a number of similar seminars in both Canada and in other countries. The taxpayer deducted his convention expenses from his partnership income. The government disallowed the deduction and the taxpayer appealed to the Tax Court of Canada.  The Court sided with the government. The Court found that Monte Carlo was within the territorial scope of the organization holding the convention since its very raison d’être was to organize and stage conventions inside and outside of Canada for profit. However, the taxpayer failed to establish that he attended the convention primarily to enhance his business as a source of income rather than for vacation purposes.  Worth mentioning is the Court’s view of the objective of section 20(10):

“… I believe that the object to be attributed to the legislation is to allow a taxpayer engaged in business to deduct convention expenses in computing his income if the primary purpose of attending was the enhancement of his business as a source of income. I do not regard the subsection as providing a means whereby a taxpayer belonging to a limited class of taxpayers shall have the benefit of deducting the expenses incurred in going to a convention if in truth and substance the primary purpose of attending was a vacation. Expenditures made for what is a vacation under the guise of attending a convention for business purposes are not deductible in computing income. If they were, this would in effect be allowing certain taxpayers to have other taxpayers share the cost of their vacations. This cannot be what the legislation intends. This is not to suggest that indulgence at a convention in activities normally associated with a vacation precludes the deductibility of expenses incurred, but those activities must be clearly subservient to the overriding business purposes of the meeting.”

In Morris Michayluk and Gloria Michayluk (Appellants) v. The Minister of National Revenue (Respondent) (1988), 88 DTC 1564, the taxpayers were Amways sales distributors and sought to deduct travel expenses to business meetings.  The government disallowed certain of these deductions, arguing that they did not relate to business purposes.  The Court allowed the deductions pursuant to section 20(10).  The Court accepted the taxpayers’ contention that, as business persons, they worked at the stability and expansion of their operation twenty-four hours a day, no matter where they were or what they were doing. The expenses here were reasonable in the circumstances, pursuant to s. 67 of the Act. The convention locations or the climatic conditions alone did not serve to disallow the deductions.  The Court concluded that  “the convention expenses did not represent a ‘disguised vacation’, nor were the expenses purely ‘recreational’, or for ‘personal motivation’, as opposed to educationally oriented. There may well have been some minor amount of ‘personal or living expenses’ included but not sufficient to cover even a major portion of the claim. In any event, the Minister has not assessed on some such ‘partial disallowance’ basis, and it is not for the Court to make that division.”

In Roche v. Canada (Minister of National Revenue – M.N.R.), [1989] T.C.J. No. 105, the taxpayer operated an Amway distributorship and sought to deduct travel expenses for three trips to the United States in each of three consecutive years.  The government disallowed the deductions on the basis that they were not incurred for the purpose of earning income from business or, in the alternative, that section 20(10) would only allow two trips each year.  The Court seemed to avoid the issue of whether the travel expenses were incurred for the purpose of earning income from business and simply decided the matter on the basis of section 20(10).  After citing (and seemingly accepting) the decision in Morris Michayluk and Gloria Michayluk (Appellants) v. The Minister of National Revenue (Respondent) (above), the Court in this case allowed the taxpayer to deduct only two of the three trips per year on the basis of section 20(10) of the Income Tax Act.  Moral of the story: convention expenses were allowed within limits.

In Friesen v. Minister of National Revenue, [1989] T.C.J., No. 926, the taxpayer was an Amway distributor who deducted expenses for sales promotional activities and meetings.  The government disallowed these deductions.  The Court found that the expenses for attendance at conventions in Canada and the U.S. fell within either section 18(1)(a) or 20(10) of the Income Tax Act and, therefore were prima facie deductible to the extent that they were reasonable.   And on the issue of reasonableness, the Court found that, in the circumstances, they were unreasonable and thus were not allowed in light of section 67. The Court noted that the business had not been able to generate a profit or show a reasonable expectation of profit in the near future: “This Court is not prepared to allow convention expenses if a business has not shown a profit and paid tax thereon, or in very exceptional circumstances receives concrete evidence which showed that profit was imminent.”  Moral of the story: your expenses need to be reasonable!

In Graves v. M.N.R., [1990] F.C.J. No. 277, the taxpayers – Amway distributors – sought to deduct travel expenses incurred in traveling to Amway networking meetings in the U.S. designed to develop leadership skills germane to the expansion of their business.   The government denied these expenses on the basis that they were person or living expenses and not incurred to earn income (recall section 18(1)(a) and (b)).  The Federal Court of Canada – Trial Division allowed these expenses, however, on the basis that they were either legitimate business expenses under section 18(1)(a) OR convention expenses within the meaning of section 20(10) of the Income Tax Act. The conventions included intensive sessions, held primarily during the weekends, with large group meetings, smaller seminars, training sessions and only limited social gatherings. These took up most of the day and, with the exception of breaks for eating, continued with seminars and meetings into the evening and often past midnight.  The Court accepted that the personal activities of the taxpayers were brief and clearly subordinate to the business purposes.The Court held that the deductions were allowed and were reasonable in light of section 67 of the Income Tax Act and the evidence presented by the taxpayers (namely, that it was reasonable for the taxpayers to go to US conventions to learn about selling their business even though audio tapes and Canadian conventions may have been available).

In Wees v. Canada, [1994] T.C.J. No. 1192, the taxpayer was an Amway salesperson and had deducted expenses for conventions.  The taxpayer argued that he attended the meetings to teach others his techniques and, by doing so, would receive a portion of their sales commissions.  Therefore, he was incurring the expenses to produce income. The government only allowed the taxpayer to claim expenses for two conventions (on the basis of section 20(10)) and denied the other expenses. The Court sided with the government and dismissed the case.  The Court held that the expenses incurred by the taxpayer were incurred to develop long-term (i.e. capital) assets and therefore they were capital expenses and allowable only where they fit the conditions of section 20(10) of the Income Tax Act, which related to conventions. The government had already allowed the maximum expenses permissible under section 20(10). The meetings the taxpayer was engaged in were conventions.

In Ankrah v. Canada, [2003] T.C.J. No. 4, the taxpayer – an Amway distributor, sought to deduct travel expenses to motivate recruits and attend conventions. The government claimed that these expenses were incurred for personal benefit of the family and not for business and restricted them to the maximum allowed under section 20(10) of the Income Tax Act..  The Court held that the expenses, in their entirety and not just limited to two conventions, were deductible on the basis that the taxpayer incurred them for the purpose of gaining or producing income from a business (i.e. section 18(1)(a)).   The Court cited the decision in Graves v. M.N.R. (above) and concluded that, “[i]n respect to travel and convention expenses, the evidence supports that these were business rather than personal expenses.”

In Shaver v. Canada, [2004] T.C.J. No. 3, a taxpayer tried to deduct travel expenses to attend monthly business meetings.  And on one occasion, he flew himself, his wife and some of his distributors to Las Vegas on vacation to reward them and promote his business. The government argued that the monthly business meetings fell within the definition and rules relating to “conventions” and disallowed most of the travel expenses because the taxpayer was only allowed to deduct convention expenses to two (2) per taxation year and had exceeded that limit.  The court agreed and held that “the seminars in question herein can very well be defined as formal meetings of members of an organization (Amway) that are held for business purposes and that result in the acquisition of knowledge by those attending them. Accordingly, in my view, these seminars are conventions within the meaning of the Act, as defined in the case law and, incidentally, in the Interpretation Bulletin” (IT-357R2).  And with respect to the trip to Las Vegas, the taxpayer claimed that this was a special promotion expense and were incurred for a motivational meeting with successful industry members.  Here, the government claimed that these expenses to Las Vegas were not incurred for the purposes of gaining or producing income from a business or property and also argued that those expenses were unreasonable.  The Court agreed with the government and held that the taxpayer had not proven that “the primary purpose of incurring the expenses related to the Las Vegas trip was the enhancement of his business per se.  The expenses are consequently not deductible…”  The Court added that, even if it found the expenses were deductible as legitimate business expenses, they were so excessive as to be unreasonable and therefore non-deductible.

In Gunter v. Canada, [2010] T.C.. No. 91, the taxpayer (who was in the hairstyling business and NOT an Amway distributor 😉 sought to deduct the cost of an educational cluster course sponsored by Maritime Beauty Supply on Redken on Redken products, plus numerous medians of an organization called Full Circle.  The issue was whether these meetings were “conventions” under section 20(10) of the Income Tax Act.  The Court held that they were conventions and allowed the deductions.  The Court came to that conclusion on the basis that the meetings were well organized and planned quite professionally, had a direct relationship to the business of the taxpayer, were held fairly frequently, was not a loose gathering (but a professional group), there were detailed agenda minutes, and the purpose of the meeting was to learn about new products, techniques, and management ideas.  For these reasons, the Court found that the meetings constituted a “convention” under the Act.

Bottom Line

Based on the above analysis, here are some helpful tips to help ensure that your expenses are tax-deductible:

  1. Understand the law (read above).
  2. Keep your receipts.
  3. If the registration fee includes meals and entertainment, ask if these costs are shown as separate items on the receipt.  Otherwise, the $50 a day rule applies (see above).
  4. If you are combining a vacation with a conference, be sure to keep separate records of your personal expenses (not deductible) versus business expenses (deductible).
  5. If you attend a conference outside of Canada, make sure you can justify the relevance of that convention to your business.
  6. If in doubt, speak with your dental accountant!

Unfortunately, you cannot deduct any costs for attending a convention on a cruise, no matter who sponsors it.  The government will not accept expenses for a national convention held on an ocean cruise ship. Even if the ship travels between Canadian and U.S. cities or 2 U.S. cities the convention is deemed to be outside North America, and therefore not allowable.

The Content of this post is provided for informational purposes only. It is not intended to be legal, financial, tax, or other professional advice of any kind. You are advised to contact DMC (or other counsel) to seek specific legal advice concerning your individual situation.