21 November 2002 External T.I. 2002-0129645 - TRAVEL EXPENSES-EMPLOYEES

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CCRA.

Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ADRC.

Principal Issues: Employees (they do not receive any travel allowances) work at XXXXXXXXXX at a number of different work sites in XXXXXXXXXX . An employee may work at a work site from two to three weeks to three or four months. Are the employees entitled to claim travel expenses under paragraph 8(1)(h.1) of the Income Tax Act in travelling between their residences and the XXXXXXXXXX ?

Position: On the basis of documents in our file, general comments were provided to the effect that travel expenses could not likely be claimed.

Reasons: Documents in our files and court cases.

XXXXXXXXXX
2002-012964
M. Eisner, CA
November 21, 2002

Dear XXXXXXXXXX:

Re: Motor Vehicle Travel Expenses - Employees

This is in reply to your letter of March 13, 2002 concerning the above-noted subject.

In the circumstances of your situation, a company (the "Company") owns and operates XXXXXXXXXX at a number of different sites in XXXXXXXXXX, where some of the Company employees (the "Employees" or "Employee", as the case may be) carry out their employment duties. The Employees do not receive travel allowances with respect to their travel between their residences and the work sites. An Employee may work at a particular XXXXXXXXXX for periods of time that range from two to three weeks to three or four months. Once a job is complete, the Employee will normally proceed to report to the next work site (or be laid off and report to the next site as soon as work at another site is available). You indicate that employees rarely travel from one work site directly to another.

You have asked us whether an employee is entitled to deduct motor vehicle expenses under paragraph 8(1)(h.1) of the Income Tax Act (the "Act") for travelling between the Employee's residence and the XXXXXXXXXX sites.

Our Comments

Written confirmation of the tax implications inherent in particular transactions is given by this Directorate only where the transactions are proposed and are the subject matter of an advance income tax ruling request submitted in the manner set out in Information Circular 70-6R5. Where the particular transactions are completed, the enquiry should be addressed to the relevant Tax Services Office. However, we have proceeded to provide general comments on your situation.

As you are no doubt aware, general comments on the deductibility of expenses under paragraph 8(1)(h.1) of the Act are set out in Interpretation Bulletin IT-522R "Vehicle, Travel and Sales Expenses of Employees". In addition, in determining whether amounts have been incurred "for travelling the course of the ... employment", as required by paragraph 8(1)(h.1) of the Act, it is generally our position that the cost of travelling between an employee's home and the place where he or she regularly reports for work is personal and cannot be considered incurred for travelling in the course of employment.

Whether an employee regularly reports for work at a particular XXXXXXXXXX is a question of fact requiring a review of all the relevant facts of each case. An employee who reports to work at a particular site for an extended period of time will likely be considered to regularly report to work at such location. On the other hand, even though an employee may change location on a weekly basis, it will also be relevant to consider whether such employee reports for work at a particular location more than once, and the frequency of such returns. In our view, an employee may have more than one regular place of employment and, in fact, it is the nature of some employment situations that more than one location may be viewed as a regular workplace. Accordingly, on the basis that, in the circumstances of your situation, Employees report to work at a particular XXXXXXXXXX for an extended period of time or travel to various XXXXXXXXXX with some regularity in the course of their employment, then we would expect that, prima facie, the Employee's travel to the XXXXXXXXXX sites from home would be personal.

In addition, we would also note that, in our view, if an employee was hired to work at a particular XXXXXXXXXX, his or her employment duties carried on at that site pursuant to the employment contract would be considered to be carried on at "the employer's place of business" and not "in different places", for purposes of paragraph 8(1)(h.1) of the Act, notwithstanding that the employee may subsequently be hired to work at another of the employer's XXXXXXXXXX (after being laid off, for example). The employee would also be considered to regularly report for work at the particular XXXXXXXXXX, such that travel between the XXXXXXXXXX and the employee's residence would be personal in nature. These comments are consistent with the decision in Lorne Nelson v. MNR, 81 DTC 190 (TRB), wherein it is stated at p.192:

"It appears to be logical ..., to consider that the "employer's place of business" as used in section 8(1)(h)(i) of the Act, does not necessarily refer to the employer's head office or any of its administrative offices but refers specifically to that establishment of the employer for which the taxpayer was hired, to which he was assigned and at which he ordinarily reports for work. In other words, the "employer's place of business" should in my opinion be interpreted in relation to the taxpayer."

Should you require further assistance with your particular situation, we would suggest that you contact your local Tax Services Office.

Yours truly,

Milled Azzi, CA
for Director
Business and Partnerships Division
Income Tax Rulings
Policy and Legislation Branch