30 April 2003 Internal T.I. 2003-0007907 - 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 CCRA.

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

Principal Issues: Whether motor vehicle expenses of XXXXXXXXXX workers should be allowed a deduction in a specific situation.

Position: Yes.

Reasons:     The taxpayer is ordinarily required to travel away from the employer's place of business or at different places and the other requirements of par. 8(1)(h.1) are met in this situation.
		April 30, 2003

	XXXXXXXXXX  Taxation Services Office	HEADQUARTERS
	Client Services Division	P. Massicotte, CA, M.Fisc.
(613) 590-1116

Attention: XXXXXXXXXX

		2003-000790

Travelling Expenses

This is in response to your memorandum of March 11, 2003, requesting our comments in connection with the deduction under paragraph 8(1)(h.1) of the Income Tax Act (the "Act") of motor vehicle expenses of a taxpayer employed as a XXXXXXXXXX worker in a specific situation.

The facts as we understand them are as follows:

1. The taxpayer is employed by a XXXXXXXXXX company. His duties consist of XXXXXXXXXX.

2. The taxpayer normally works on a XXXXXXXXXX shift with a group of employees and returns home for the next XXXXXXXXXX. The employment duties of the taxpayer require him to continuously report for work at different locations where XXXXXXXXXX.

3. XXXXXXXXXX.

4. At the beginning of a XXXXXXXXXX shift, the taxpayer is required to use his motor vehicle to get from home to the location where XXXXXXXXXX, and reports there to work with a group of employees. The taxpayer obtains instructions by telephone from his employer's XXXXXXXXXX office, advising him where he needs to go at the beginning of his work shift, but otherwise does not ordinarily report for work at that office.

5. XXXXXXXXXX. The employer provides the employees with sleeping and eating facilities XXXXXXXXXX during their XXXXXXXXXX shifts. At the end of a XXXXXXXXXX shift, the taxpayer is required to use his motor vehicle to return home.

6. The taxpayer receives his work instructions, prepares and files reports, and performs other various administrative duties required of him XXXXXXXXXX.

7. The taxpayer generally does not perform XXXXXXXXXX work at the same location more than once but continuously moves on to different locations as needed.

Our Comments

As you know, an employee may only deduct those reasonable outlays and expenses related to employment income which are specifically permitted under section 8 in determining income from employment.

A deduction for amounts expended by employees in a year in respect of motor vehicle expenses incurred for travelling in the course of an office or employment is allowed under paragraph 8(1)(h.1) of the Act where inter alia an employee is required under the contract of employment to pay for the motor vehicle expenses incurred in the performance of the duties of the office or employment. The employee must also be ordinarily required to carry on the duties of the office or employment away from the employer's place of business or in different places.

Consistent with the comments in paragraphs 14 and 49 of Interpretation Bulletin IT-522R "Vehicle, Travel and Sales Expenses of Employees", it is generally our position that travelling between an employee's home and the place where he or she regularly reports for work is personal and not considered "travelling in the course of the office or employment" or travelling "in the performance of the duties of the office or employment". Amounts expended in respect of travel between home and a regular place of work are therefore not deductible.

Whether an employee regularly reports for work at a particular location 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 frequent 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.

Based on the limited facts described above, it appears that the taxpayer does not regularly report to work at any particular location but rather ordinarily carries on the duties of his employment in different places. As a result, it is our opinion that when the taxpayer in the situation described above is travelling from home to XXXXXXXXXX at the different work sites, to perform XXXXXXXXXX duties required by his employer, he may be considered to be travelling in the course of his employment. In our view, the amounts expended for motor vehicle expenses incurred while so travelling would be deductible under paragraph 8(1)(h.1), provided the conditions described in subparagraphs 8(1)(h.1)(iii) and (iv) do not apply.

We would note however that if an employee was hired to work at a particular site, or at a particular series of sites, his or her employment duties carried on at each such 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 places of business (after being laid off, for example). 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."

We trust the above comments are of assistance to you.

Milled Azzi, CA
for Director
Business and Partnerships Division
Income Tax Rulings Directorate

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