4 February 2000 External T.I. 1999-0008005 - TRANSPORT EMPLOYEE TRAVEL EXPENSES

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 Department.

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

Principal Issues:

A Canadian resident will commute to XXXXXXXXXX , which is the location at which he is based, XXXXXXXXXX . In computing his employment income, can he claim the airfare to and from XXXXXXXXXX , accommodation in XXXXXXXXXX , and motor vehicle expenses while in XXXXXXXXXX ?

Position TAKEN:

No.

Reasons FOR POSITION TAKEN:

One of the requirements for claiming the deduction provided under paragraph 8(1)(g), is that the disbursements for meals and lodging must have been made by the employee while on travel away from the municipality and, if there is one, the metropolitan area where the employee's home terminal is located. In the above case, the home terminal is XXXXXXXXXX ; accordingly, meals and lodging incurred while there are not deductible.

The above airfare expenses to and from the location at which the T/P is based, as well as the lodging and motor vehicle expenses at that location, would not be incurred in the course of his employment within the meaning of paragraphs 8(1)(h) and (h.1). In our view, expenses incurred in travelling to the place at which a person ordinarily reports for work are generally in the nature of personal or living expenses.

XXXXXXXXXX 1999-000800
M. Azzi
February 4, 2000

Dear Sir:

Re: Travel Expenses

This is in reply to your letter of November 12, 1999, wherein you requested our views on the deductibility of certain travel expenses.

You indicate that you are currently a resident of XXXXXXXXXX, and are considering moving to Canada with your wife and becoming Canadian residents. As a Canadian resident, you intend to continue working for your current employer, XXXXXXXXXX. Accordingly, you will commute to the location at which you are based, XXXXXXXXXX, and, as a result, will incur travel expenses for which you will not be reimbursed. We understand that, for accommodation in XXXXXXXXXX, and depending on the length of your stays, you are considering renting a location on a monthly basis and, for shorter stays, you would incur hotel expenses. You question whether this accommodation expense would be deductible in computing your employment income from XXXXXXXXXX. You also question whether you can deduct your airfare to and from the location at which you are based, and whether you can claim automobile expenses when you are at that location. We understand that you have a copy of the Employment Expenses guide.

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 ruling request submitted in the manner set out in Information Circular 70-6R3, dated December 30, 1996. Where the particular transactions are completed, the enquiry should be addressed to the relevant tax services office. However, we are prepared to offer the following general comments.

Pursuant to subsection 8(2) of the Income Tax Act (the "Act"), no deduction is allowed in computing employment income, except for the amounts provided under section 8 of the Act. Under paragraph 8(1)(g) of the Act, an employee who works for an employer whose principal business is the transportation of passengers, goods, or both, may be entitled to a deduction for meals and lodging. The criteria for claiming this deduction are explained in the enclosed Information Circular 73-21R7, Away-From-Home Expense (however, it should be noted that the 80% limit referred to in paragraph 6 of the circular, in respect of meals, was changed to 50% in 1994), and the form for claiming this deduction is form TL2, Claim for Meals and Lodging Expenses (included in the Employment Expenses guide). One of the requirements for claiming the deduction provided under paragraph 8(1)(g) of the Act, is that the disbursements for meals and lodging must have been made by the employee while on travel away from the municipality and, if there is one, the metropolitan area where the employee's home terminal is located. As it appears that your home terminal is XXXXXXXXXX, you will not be entitled to the paragraph 8(1)(g) deduction for meals and lodging you incur while there.

We note that, with your letter, you included form T2200, Declaration of Conditions of Employment. This form is used where, inter alia, an employee is making a claim for travel expenses under paragraph 8(1)(h) of the Act, or for motor vehicle expenses under paragraph 8(1)(h.1) of the Act. These deductions are explained in the enclosed Interpretation Bulletin IT-522R, Vehicle, Travel and Sales Expenses of Employees. Both of these provisions require, inter alia, that the employee be required under the employment contract to pay the travel expenses or the motor vehicle expenses, as the case may be, incurred in the performance of the employment duties, and that the amounts be expended by the employee for travelling in the course of the employment. In addition, by virtue of subsection 8(4) of the Act, an amount cannot be claimed under paragraph 8(1)(h), in respect of a meal consumed by an employee, unless the meal was consumed while the employee was required by his or her duties to be away, for a period of at least twelve hours, from the municipality and, if there is one, the metropolitan area where the employer's establishment to which the employee ordinarily reports for work is located.

In our view, the above airfare expenses to and from the location at which you are based, as well as the lodging and motor vehicle expenses at that location, would not be incurred in the course of your employment within the meaning of paragraphs 8(1)(h) and (h.1) of the Act. In our view, expenses incurred in travelling to the place at which a person ordinarily reports for work are generally in the nature of personal or living expenses. Accordingly, based on the information submitted, in our view, the above expenses would not be deductible in computing your employment income.

We trust that these comments will be of assistance.

Yours truly,

Jim Wilson
for Director
Business and Publications Division
Income Tax Rulings Directorate
Policy and Legislation Branch

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