Continuing Medical Education (CME) is vital for physicians to maintain licensure and professional competence. But when that CME event takes place aboard a cruise ship or in a resort destination, the Canada Revenue Agency (CRA) applies specific and often restrictive rules when determining whether related expenses are deductible under the Income Tax Act.
This article explains, with references to legislation, CRA guidance, and case law, why CME cruises are rarely deductible—and what alternatives may legitimately qualify.
What the Income Tax Act Says – Section 20(10)
The CRA’s authority to allow the deduction of convention expenses comes from section 20(10) of the Income Tax Act (Canada):
“…there may be deducted… an amount paid… as or on account of expenses incurred by the taxpayer in attending… 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.”
In other words:
- The event must be hosted by a legitimate business or professional organization;
- The location must fit within the organization’s ordinary geographic area of operations;
- The event must be connected to your business or profession.
CRA’s Position on Cruise Ship Conventions – IT-131R2
Although now archived, CRA Interpretation Bulletin IT-131R2 continues to be used as reference in tax practices and audits. It makes CRA’s position on cruises explicit:
“Where a convention is held on board a cruise ship, the costs of attending such a convention are not considered to be incurred in respect of a convention held in the geographical area where the sponsoring organization usually carries on its activities.”
— IT-131R2, paragraph 8
In other words: If it’s on a cruise ship, expect CRA to deny the deduction. This is based not on the subject matter of the conference, but the location and organizational legitimacy, as required by s. 20(10).
Personal Expenses – ITA Section 18(1)(h)
CRA also enforces subsection 18(1)(h) of the Income Tax Act, which prohibits the deduction of personal or living expenses, including those for accompanying family members:
“No deduction shall be made in respect of personal or living expenses of the taxpayer, other than travelling expenses incurred by the taxpayer while away from home in the course of carrying on the taxpayer’s business.”
This is reinforced by the CRA’s Income Tax Audit Manual, Chapter 13, which explicitly states:
“Expenses incurred for accompanying family members are considered personal and are not deductible.”
CRA’s Reasonableness Standard – ITA Section 67
Even when conventions meet all the basic criteria, CRA applies section 67, which states that no deduction is allowed “except to the extent that the outlay or expense was reasonable in the circumstances.”
In practice, this means:
- CRA generally expects at least 4–6 hours of structured sessions per day;
- Agendas should be detailed, and attendance should be documented;
- CRA will scrutinize whether the primary purpose of the trip was business or personal.
If the educational portion is brief and the balance of time is spent on leisure, excursions, or rest, CRA will recharacterize the trip as personal, and the deduction will likely be denied.
What About My Colleagues Who Deducted It?
This is one of the most common questions—and misunderstandings—I hear:
“But I know doctors who claim the same cruise expenses every year. CRA’s never come after them.”
Here’s the truth:
- Just because a deduction hasn’t been audited doesn’t mean it’s acceptable.
CRA doesn’t audit every return annually. Often, it’s a matter of timing. But once a review occurs, deductions like CME cruises are frequently disallowed. - CRA guidance and court rulings override anecdotal practice.
Following your peers’ example is not a defence in tax law. If CRA audits you, their position is backed by the Income Tax Act, CRA guidance, and case law—not informal peer advice. - Past acceptance does not guarantee future approval.
Even if someone got away with it once, that doesn’t mean the expense complies with the law or will survive scrutiny today.
In Rovan v. M.N.R., 86 DTC 1791, a physician attended a convention in Monte Carlo. Although it included medical content, the Tax Court ruled the expenses were primarily personal due to the nature and location of the trip.
In Cormack v. M.N.R., 64 DTC 43, the court disallowed a doctor’s European CME trip after determining the conference was a small component of a broader vacation.
In Howard v. M.N.R., 85 DTC 509, convention expenses were denied because the organization was not a qualifying professional body under the ITA.
In short: CRA and the courts focus on facts—not what your friends are doing when the CRA isn’t looking.
Legitimate CME Options That May Be Deductible
If you’re seeking compliance while still pursuing professional development, consider these CRA-compliant options:
- Conferences held by recognized Canadian professional organizations
Events sponsored by groups like the Canadian Medical Association (CMA) or provincial colleges and held in Canada (or rotating across provinces) are typically compliant. - Educational events outside Canada (non-cruise)
If the event is hosted by a recognized international professional organization, held in a reasonable location, and involves full-day structured sessions, expenses may be partly deductible—if documented properly. - Accredited online or university-level CME
These can be claimed under s. 18(1)(a) as ordinary business expenses related to maintaining or improving your skillset. - In-house or third-party seminars
Locally run, specialty-focused medical learning programs or CPD-accredited events often qualify, especially when tied to earning professional income.
Final Word (and Practical Tip)
While CME is essential, claiming the expenses through your corporation requires careful attention to CRA’s rules under s. 20(10), s. 18(1)(h), and s. 67, as well as established case law and CRA policy.
Just because someone you know deducted a similar expense doesn’t mean CRA will let you do the same.
If you’re planning an upcoming CME trip and want to know if it will be deductible in whole or in part, contact me before you book. I’ll walk you through the relevant CRA criteria and help you determine what’s supportable—and what’s likely to be challenged in an audit.
Written by Jonathan Tucker, CPA, CA
Specializing in tax planning and advisory for Canadian physicians.
