15 February 2007 External T.I. 2005-0164431E5 - Personal vs. Business Kilometres

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.

Principal Issues: Whether the distance travelled by an employee who maintains a home office and is required to travel to the employer's place of business to attend meetings, is considered business or personal with respect to a per kilometre allowance received by the employee from the employer on account of such travel.

Position: Personal.

Reasons: The CRA general position is that travel between an employee's home and regular place of employment is personal, even in situations where an employee has a home office that is also a regular place of employment.

XXXXXXXXXX 						2005-016443
							Tim Fitzgerald, CGA
February 15, 2007 

Dear XXXXXXXXXX:

Re: Personal Versus Business Kilometres

This is further to your email of March 3, 2006 wherein you requested our views with regard to travel between an employee's home-office to the employer's place of business.

We apologize for the delay in responding to you.

We understand the facts to be as follows:

• The main office of XXXXXXXXXX, operating as XXXXXXXXXX ("Aco") is located at XXXXXXXXXX ("Town R") near XXXXXXXXXX ("Town M").
• All mail is received and dispatched through Town R and there are no carriers going back and forth between locations.
• Aco also maintains other offices in XXXXXXXXXX, situated in, XXXXXXXXXX, ("Town S") and XXXXXXXXXX ("Town K"), which are considered satellite offices where business meetings are sometimes held.
• With the exception of two employees, all of Aco's employees work at the main office in Town R and live in its surrounding area.
• At the commencement of their respective employment, each of these two employees chose to live outside the Town M area.
• These two employees have each been assigned an office at the main place of business in Town R but for the most part, when not travelling on business throughout the province, they work from their respective home offices situated in XXXXXXXXXX ("Town J").
• These two employees are each paid a monthly travel allowance of $XXXXXXXXXX. Travel logs are maintained and a comparison to actual is completed during the year resulting in payments either being made to the employee or by the employee back to the organization.
• On occasion, these two employees are required to attend meetings at the main office in Town R, after which, on some occasions, they are required to travel elsewhere on business.

In respect of these two employees who live in Town J, you have asked whether the distance driven from their respective home offices in Town J to Town R to attend meetings at the employer's office in Town R would be considered business or personal for tax purposes. Secondly, in the case where these two employees are further required to drive to another location following the meeting at the office in Town R, would the distance travelled for business purposes be considered to have commenced from their respective home offices in Town J, or to have commenced for business purposes from the office in Town R to the subsequent location?

Our Comments

The particular situation outlined in your letter is a factual one, involving specific taxpayers. As explained in Information Circular 70-6R5, it is not this Directorate's practice to comment on proposed transactions involving specific taxpayers other than in the form of an Advance Income Tax Ruling. Since your situation involves a specific taxpayer and a completed transaction, you should submit all relevant facts and documentation to the appropriate tax services office for their views. However, we are prepared to offer the following general comments, which may be of assistance.

The Canada Revenue Agency's general position is that travel between an employee's home and his or her regular place of employment is personal, even when an employee maintains a home office that is also a regular place of employment. Therefore, with respect to your first question, the distance travelled between the employee's home in Town J and the employer's office in Town R where he or she is regularly required to attend meetings is personal for purposes of determining the taxable status of the allowance.

In terms of your second question, if the employee leaves the employer's office in Town R to travel to another location for business purposes, the distance travelled for business purposes would be considered to have commenced from the employer's office in Town R, not from the employee's home office in Town J. If the employee's travel were to a location that is not a business location of the employer but for example, another business location, such as to meet with a client, and the employee were to return home from the client's location, such travel would also be considered business related.

We trust these comments are of assistance.

Yours truly,

Randy Hewlett
Section Manager
Business and Partnerships Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch