5 November 2001 Internal T.I. 2001-0102467 - standby charges

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: For purposes of the standby charge calculation, is the distance between an employee's home and an employer's retail store and the distance between one of the employer's retail stores and the employee's home, considered personal or "in connection with or in the course of the taxpayer's office or employment"?

Position: It is a question of fact.

Reasons: It will depend on whether the stores in question can be viewed as "the employer's place of business to which the employee reports regularly". It is well established by the courts that an employee can have more than one work location where he normally worked.

		November 5, 2001

	Claude Englehart, Director	HEADQUARTERS
	Technical Applications and	Jacques E. Grisé
	   Valuations Division  	957-2059
	Audit Directorate
		2001-010246

Standby Charge

This is in reply to a fax dated September 20, 2001 sent to us by Mr. Tony Wark, requesting our comments on a submission made by the law firm of XXXXXXXXXX (the representative) on September 12, 2001 concerning a proposed reassessment on XXXXXXXXXX (the employer) employees with respect to taxable benefits in the nature of standby charges.

The representative concluded that the question of whether a particular item is in the nature of a taxable benefit (as opposed to a legitimate employment expense) must be based on a common sense appreciation of all the facts and not a routine application of a rule that yields unfair results. The representative submitted that none of the employees who operated comprehensive home-offices had any personal travel with respect to their employer-provided vehicles. He further submitted that the travel between non-home stores and the residences of the other employees subject to reassessment was not personal. XXXXXXXXXX.

The question of whether or not a particular employee has used his or her employer's vehicle for personal travel and the quantum of such travel is one of fact. However, in our view, it is possible for an employee to have more than one employer's place of business to which the employee reports regularly. The travel to and from an employee's home and these places would, in our view, be personal travel. Whether an employee reports regularly to a particular place of business is, again, one of fact. However, in the particular situation being contemplated we have previously stated:

"In the McDonald case [98 DTC 2151], none of the work sites were considered as a place of business to which the taxpayer reported regularly. However, in our view, if a DM [district manager] or XXXXXXXXXX reports with some regularity to all of the Company's different locations located in his or her particular region, as would appear to be the case from the excerpts of the travel logs provided, it is likely that these different work locations can be considered regular work locations. The fact that an employee has a home location to which he or she reports to more frequently than the others does not affect the status of the other work locations as regular work locations. Thus, the travel by any particular DM or XXXXXXXXXX between his or her home and any of these other regular work locations should likely be considered personal."

The representative referred to the decision of the Federal Court of Appeal in The Queen v. Chrapko, 88 DTC 6487. Chrapko considered the treatment of a racetrack employee who resided in Niagara Falls and who worked 75% of his time at two racetracks in Toronto and 25% at another racetrack in Fort Erie. The court restricted allowable travel expenses to expenses incurred by Mr. Chrapko in travelling to Fort Erie. The representative argues that since no employee travelled to a particular non-home store more than 25% of his or her working time, the stores, based on the results in the Chrapko case, were other than the employer's place of business to which the employee reported regularly.

In 1977, Mr. Chrapko had claimed $1,560 for travelling to either Greenwood or Woodbine in Toronto and $220 for travelling to Fort Erie. We disallowed the $1,560 claimed for travel to Toronto and, for one reason or another accepted his claim for travelling to Fort Erie. It seems that the Federal Court of Appeal simply agreed on how Mr. Chrapko was assessed. Accepting that a place of business visited less than 25% of an employee's time cannot be an employer's place of business to which the employee reported regularly could lead to absurd results. For example, an employee may be required to report and work in each of his employer's XXXXXXXXXX stores once a week. The employee would work XXXXXXXXXX% of his time at each store. If the representative's argument were to be accepted, such an employee would not have an employer's place of business to which he reported regularly. In our view, the employee would have XXXXXXXXXX such places.

Marc Vanasse, CA
Director
Business and Partnerships Division
Income Tax Rulings Directorate

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