2 March 2001 External T.I. 2001-0069105 - EMPLOYEE MOTORHOME EXPENSE

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: Can expenses be claimed by an employed commission salesperson in respect of a motorhome to be used for transportation to customers, displays, meetings, paperwork and sleeping accommodations?

Position: Expenses of a commission salesperson are set out in IT-522R. The expenses could include the appropriate percentage of expenses relating to a motorhome used to earn the commission income.

Reasons: See IT-522R

XXXXXXXXXX 2001-006910
J. E. Grisé
March 2, 2001

Dear XXXXXXXXXX:

Re: Motorhome Expenses of an Employee

This is in reply to your letter of January 22, 2001, requesting our opinion concerning the use of a motorhome by an employed commission salesperson.

The motorhome would be purchased by the employee at the request of the employee's employer who would provide the form T2200 certificate set out in subsection 8(10) of the Income Tax Act (the Act). The motorhome would be used for travelling, accommodation, sales office and showroom while away from the employee's home base. The motorhome would be used more than 50% for business purposes.

Written opinions with respect to proposed transactions or to the facts of a particular transaction which is related to specific taxpayers are only given in the context of an advance income tax ruling pursuant to the guidelines in information Circular 70-6R4. The following general comments are not an advance income tax ruling and are not binding on the Canada Customs and Revenue Agency.

Paragraph 8(1)(f) of the Act permits a deduction in computing an employee's income for a taxation year from an office or employment. The employee must be employed in connection with the selling of property or negotiating of contracts for the employer. The amounts deductible are restricted to the amounts expended by the taxpayer in the year for the purpose of earning income from the employment to the extent of the commissions received by the employee. Such amounts expended could include the expenses relating to a motorhome used to earn the income from employment. Paragraph 8(1)(j) of the Act could apply with respect to interest on a loan to purchase the motorhome and capital cost allowance.

Please refer to paragraphs 13 and 14 of Interpretation Bulletin IT-522R, Vehicle, Travel and Sales Expenses of Employees, for information on the records that should be kept. Chapter 1 of the Employment Expenses guide for 2000 (document number T4044) also has useful information on keeping records. Chapter 2 of the guide may also be of interest for information on the other restrictions and requirements of paragraph 8(1)(f) of the Act.

Please refer to the Employee and Partner GST/HST Rebate guide for information concerning an employee's GST/HST rebate.

If you need further assistance for a particular client, please contact officials in the Client Service Division of your local Tax Services Office.

We hope our comments are helpful.

Yours truly,

John Oulton, CA
for Director
Business and Partnerships Division
Income Tax Rulings Directorate

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