19 September 2000 External T.I. 2000-0024625 - ISSUANCE OF T2200-SCHOOLS

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
Whether school administrative officers can be issued form T2200

Position

Not enough facts. Provided general comments only.

Reasons
If the conditions of subparagraph 8(1)(h) or (h.1) are not met, the employer should not issue form T2200

XXXXXXXXXX 2000-002462
C. Tremblay
Attention: XXXXXXXXXX

September 19, 2000

Dear Sir:

Re: Issuance of Form T2200 for Administrative Officers

This is in response to your letter of April 20, 2000 in which you requested direction regarding the issuance of form T2200 to your administrative officers with respect to motor vehicle expenses. More specifically, you have requested our comments regarding question # 2 on form T2200 regarding whether you normally require the employees to work away from your place of business, or in different places. We understand that the employees are employed in the schools and their employment contract specifies that they either provide their own vehicle for use as required or ensure they have appropriate transportation in the discharge of their duties. You advise that administrative officers are often required to use their vehicles throughout the week, either to drive students, or to attend weekly Principals' meetings at a central location, however, driving a vehicle does not include a majority of their duties.

Our Comments

Written confirmation of the tax implications inherent in particular transactions are given by this Directorate only where the transactions are proposed and are the subject matter of an advance ruling request (see Information Circular 70-6R3, copy enclosed). Where the particular transactions are completed, the enquiry should be addressed to the relevant Tax Services Office. However, we are prepared to provide the following comments which are of a general nature.

Form T2200 is the prescribed form which must, pursuant to subsection 8(10) of the Income Tax Act (the "Act"), be signed by an employer in order for an employee to claim deductions for motor vehicle expenses under paragraph 8(1)(h.1) of the Act. With this form, the employer certifies that certain of the required conditions of paragraph 8(1)(h.1) of the Act are met.

Under paragraph 8(1)(h.1) of the Act, reasonable amounts that an employee spends in the year in respect of motor vehicle expenses for travelling in the course of an office or employment may only be deducted from the employee's income from an office or employment if the employee is ordinarily required to carry on the duties of the office or employment away from the employer's place of business or in different places; if the employee is required, under the contract of employment, to pay motor vehicle expenses incurred in the performance of the duties of the office or employment; and if the employee is not in receipt of an allowance for motor vehicle expenses that is excluded from income by virtue of paragraphs 6(1)(b) of the Act. Also, the employee must not have claimed any deduction for the year under paragraphs 8(1)(f) of the Act for an amount to be deductible under paragraph 8(1)(h.1) of the Act.

Considering first the meaning of "ordinarily", the jurisprudence indicates that this term describes activities which are normal, or of regular occurrence; in other words, activities which are not rare or abnormal or minimal. Courts have also interpreted the word "ordinarily" to mean "in most cases" or "as a general rule". As stated in paragraph 32(a) of Interpretation Bulletin IT-522R (copy enclosed), "ordinarily" means "customarily" or "habitually" rather than "continually", but there should be some degree of regularity in the travelling that the employee is required to do.

With respect to the meaning of "required" such an activity must be one which is specifically understood by both the employer and the employee to be necessary for the proper performance of the contract. The term "required" means that the travelling is necessary to the satisfactory performance of the employee's duties (it does not necessarily imply that the employer must order the employee to travel).

The term "place of business" generally is considered to have reference to a permanent establishment of the employer such as an office, factory, warehouse, branch or store, or to a field office at a large construction job, and "in different places" generally refers to the situation where the employer does not have a single or fixed place of business. For example, a school inspector who has a number of schools to supervise and is required to travel from school to school meets this requirement.

The employer must clearly indicate on the required form T2200 that the employee is required to pay travel expenses incurred in the performance of duties; and the employee's reasonable travel costs must not be fully reimbursed by the employer. The condition in subparagraph 8(1)(h.1)(ii) of the Act that the employee is required, under the contract of employment, to pay travel expenses incurred in the performance of the duties of the office or employment, ordinarily necessitates that there be an express requirement within the terms of a written contract of employment. We note that, based on the information provided, the employees would likely meet this condition. However, with respect to the issue of whether the employees are ordinarily required to carry on their duties away from the employer's place of business, we do not have sufficient information. The only information you provided with respect to this condition is that these employees often have to throughout the week drive students and attend Principals' meetings, however driving a vehicle does not involve a majority of their duties. We would generally require more information (e.g. a copy of the employee's job description, details with respect to how many times a day or per week the employee would generally be expected to use his or her vehicle, etc.) before a determination could be made. The determination is one of fact and the key factor will ultimately be one of whether the Principals' meetings and driving the students are of an incidental nature. Your local taxation services office would be in a better position to assist you in this matter.

Finally, although the signing of the form T2200 by the employer is a prerequisite in order for an employee to be able to claim a deduction for certain employment expenses, a signed form T2200 does not provide an employee with any assurance that any expenses incurred are deductible since the Act contains other criteria that the employee must satisfy. For example, employees who travel from home to their work location cannot claim motor vehicle expenses incurred to get from their homes to the particular location as they would not be deductible under paragraph 8(1)(h.1) of the Act because, as explained in paragraph 14 of IT-522R, these expenses would be considered to be personal in nature and, as such, would not be considered to be for travelling in the course of an office or employment.

We trust that these comments will be of assistance.

Your truly,

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

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