Seven Tips for Staying Within Budget While Planning Your Annual Vacation
Whether you’re looking to plan a quick getaway, backpack through Europe with your partner, or drag the kids to your in-laws’ timeshare in Florida, vacations can add up quickly. Don’t break the bank – follow these seven simple tips to stay within budget while planning your annual vacation.
- Plan, plan, plan: This one sounds like a no-brainer but you’d be surprised at how many people decide to wing it when it comes to their travel plans. Booking last-minute flights and accommodations can often mean dealing with surge prices. You should also plan each day out so you know where your money will be going. Consider what is essential (like eating lunch) and what you could do without (like visiting the museum gift shop).
- Skip the 5-star hotel: Hotels can take up a large percentage of your vacation budget, and the reality is, you’re mainly sleeping there. Look for deals on hotels or explore shared services like Airbnb. If you’re leaving for an extended vacation, consider listing your own primary residence on Airbnb to offset costs. Just remember if you do, you’ll need to report that as income on your personal income tax return. If you are going to a resort, do your research on what’s included in the price. Take advantage of complimentary breakfasts for example, and don’t get fooled by what’s not included like the oh-so-tempting mini bar refreshments.
- Do as the locals do: Instead of eating at the resort restaurant, head a few blocks away and check out restaurants where locals dine. The cost will be much more efficient and the food will be more authentic. You could also grocery shop and make your own breakfast or packed lunch. But don’t stop there – opt for public transit instead of renting a car or splurging on prearranged limo services. Do your research in advance to see what ground transportations are offered from the airport. You’ll find most airports are connected to convenient public transit systems. Lastly, look for local activities and events with free admission. Many cities also have discounted admission to museums on certain days.
- Earn while you travel: If you work in a profession where freelancing is an option, why not do some writing, editing, or graphic design by the pool? Perhaps your annual vacation means it doesn’t just come once a year but will last the entire year. Just remember that even if you are living outside of Canada, traveling extensively, or working abroad, you may still have to pay Canadian income taxes. This all depends on your residency status and how long you are planning to stay outside Canada.
- Choose off-season: This doesn’t mean you should choose hurricane season in the Caribbean and spend your vacation at the hotel bar. Research the best time to go to your destination and then travel just before or after that period, so you aren’t competing with throngs of tourists.
- There’s a refund for that: While travel expenses can only be claimed on your Canadian income tax return if they were a business expense, there are refunds for travel leisure available in some countries. Thailand, for example offers a 7% VAT refund on luxury goods, so you can shop until your heart desires with less guilt. Australia has a program in place called the Tourist refund scheme (TRS), allowing travelers to claim a refund of the goods and services tax (GST) and wine equalization tax (WET) that they pay on goods in Australia. Do your research and look up local programs offered in the destination you are visiting.
- Pay attention to exchange rates: Choose countries where the Canadian dollar will stretch Look up where you will receive the best exchange rate and don’t settle for the first place you find to exchange your Canadian dollar. The CRA also provides a $200 exclusion on foreign exchange gains. Meaning, if the gain on foreign currency is less than $200 for the year, you do not need to report it.
A Tax Expert at H&R Block can help answer any questions around travel and how that will affect your personal tax return.