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To book international travel expenses in Canadian books, convert every foreign receipt to Canadian dollars at the Bank of Canada rate for the day you paid, then code it by type. Flights and hotels go in at 100%, but only half of what you spent on meals and drinks is deductible.
How do you convert foreign receipts into dollars?
Your books and your tax return both run in Canadian dollars. The CRA’s income tax folio on reporting currency says the relevant rate is the one quoted by the Bank of Canada on the day, as the CRA’s folio on income tax reporting currency explains. For a run of small, repeated items it accepts the average annual rate. It also accepts a rate from another source in some cases, so check the conditions on its currency page before you pick one.
Say a hotel bill is US$1,000 and the rate that day was 1.40 (a made-up rate, only to show the sum). You book $1,400. If your card statement later says $1,412, the $12 difference is a foreign exchange loss, and it gets its own account. Don’t bury it inside the hotel line.
Pick one method and write it down.
Which travel costs go in which account?
Keep the accounts boring and separate. A small chart is enough for most owners.
| Cost | Book it as | Deductible share |
|---|---|---|
| Airfare, train, taxis | Travel, transport | Full amount |
| Hotel | Travel, lodging | Full amount |
| Meals and drinks, including food bought on a plane or train | Meals and entertainment | 50% |
| Client dinners | Meals and entertainment | 50% |
| Foreign exchange gain or loss | Its own account | Follow your accountant |
The 50% limit for meals, drinks and entertainment on the road comes straight from the CRA’s business expense pages. There are exceptions, such as a restaurant that bills a client for a meal it sells, but a normal trip won’t hit them. Splitting meals into their own account matters because the return needs the full amount and the allowed amount as two numbers.
What does an international trip cost after tax?
Here’s a trip with round numbers. A sole proprietor in Ontario spends $1,800 on flights, $2,400 on hotels, $300 on ground transport and $900 on meals, all already converted. The meals count as $450, so the deductible total is $4,950 out of $5,400 spent.
With about $70,000 of other income in Ontario, the engine behind our income tax calculator shows roughly $1,468 less tax with those deductions than without them. Treat all $5,400 as deductible and the saving would look like $1,601. That’s $133 that isn’t yours, and it’s the sort of thing an audit undoes. To see what your own next dollar is taxed at, try the marginal tax rate calculator.
Those figures assume the whole trip was for business. If you tacked on a week at the beach, only the business part counts, and you’ll need a sensible way to split it. A common-sense approach is to count business days against total days for the shared costs, such as the hotel, and to leave the purely personal costs out altogether. Write the method down when you make the trip, not two years later.
What records should you keep from abroad?
Photograph every receipt the day you get it. Thermal paper fades, and a foreign receipt in a language you can’t read is hard to explain two years later. Add a note: who you met, or what the trip was for.
A short trip log helps more than people expect. Write the dates you left and came back, the places you went and the purpose. If the trip was a conference, keep the agenda or the registration page.
How long to hold the records is set by the CRA: six years from the end of the last tax year they relate to, according to its guide to keeping records. So a trip taken in 2026 stays in your file until the end of 2032.
What goes wrong with travel bookkeeping?
The usual errors are dull ones. Owners deduct 100% of meals. They put a personal flight on the company card and never move it to a shareholder or owner account. They forget that a receipt in euros needs a dollar figure, and end up guessing at year end.
Sales tax is a second trap. Claiming GST/HST credits on anything tied to a trip is a separate question from the income tax deduction, and the answer depends on where the cost arose and what you bought. Check the CRA’s GST/HST pages before you claim a credit. To see how much tax sits inside a Canadian receipt, the GST/HST calculator takes a few seconds.
The last one is a per-diem policy for staff. Advances and allowances carry their own tax treatment, so get that sorted before the first trip. A policy on paper that says what is reimbursed, and with what proof, still saves an owner most of the arguments, and it keeps a few bucks of daily spending from turning into a debate.
What if the trip mixes business and a holiday?
Split what can be split. Suppose the $2,400 hotel covered eight nights, and only five of them were for the conference. Taking five eighths of $2,400 gives $1,500 for the business account, and the other $900 is personal. The flight is trickier, because you’d have flown anyway. A trip that was mainly for business usually keeps most of the airfare, while a mainly personal one doesn’t.
Whichever way you go, keep the agenda, the meeting dates and a note on why the extra days were added. Reasonable and documented beats clever. If the split is large, a quick chat with an accountant before filing costs far less than an adjustment later.
The sources behind this page
The 50% limit and the currency guidance come from the Canada Revenue Agency‘s pages on business expenses, travel and foreign currency, read in 2026. The tax example uses 2026 Ontario and federal rates. For the percentage sums in your own books, the percentage calculator is quick.
Frequently asked questions
Which exchange rate should I use for foreign receipts?
The CRA points to the Bank of Canada rate for the day the amount arose, and the average annual rate for repeated small amounts. Choose one method and use it every time.
Are meals on a business trip fully deductible?
No. The CRA limits meals, drinks and entertainment while travelling to 50% in most cases. That includes food bought on a plane or train.
Where do I record a foreign exchange loss?
In its own account, apart from the expense. Your accountant can tell you how the gain or loss is treated on the return.
What if the trip was part business and part holiday?
Only the business part counts. Split the costs on a basis you can explain and note the split in your records.
How long should I keep foreign receipts?
As long as the CRA requires for business records. We didn't confirm the period for this page, so check its record-keeping guidance.
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