31 May 2002 External T.I. 2002-0125445 - 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: Employer's obligation to complete forms T2200 and TL2

Position: General comments

Reasons: Inadequate information about expenses

XXXXXXXXXX 						2002-012544
S. Parnanzone
May 31, 2002

Dear XXXXXXXXXX:

Re: Technical Interpretation Request: Claim Forms for Meal Expenses

This is in reply to your letter of February 19, 2002 regarding the above-noted subject.

Your enquiry concerns the obligation of the XXXXXXXXXX ("Employer") to complete form T2200, Declaration of Conditions of Employment, and form TL2, Claim for Meals and Lodging Expenses, for certain of its employees.

The employees in question are delivery drivers for the Employer's products and work at or out of the Employer's plant in XXXXXXXXXX. The employees deliver the products to convenience stores, grocery stores, retail outlets, etc. They may deliver the products to customers located outside of the municipality in which they report to work. The employees are scheduled to work either 8 hour or 10 hour shifts but are never scheduled for shifts of 12 hours or more. The employees are unionized and represented by their union ("Union").

The Employer's position is that it is not required to complete either form TL2 or form T2200 for the delivery employees. The Employer's position is that it is not required to complete the TL2 because it is not an employer whose principal business is the transportation of goods or passengers or both. In addition, the Employer's position is that it should not complete form T2200 since the delivery employees are not required to pay for their own travel expenses.

The Union claims that the forms must be completed by the Employer even if the manner in which the forms are completed would negate the possibility of an income deduction to the employees.

During your telephone conversation of May 21, 2002, with Mr. S. Parnanzone of this office, you advised that the work conditions of the Employer's delivery employees have been the same for a number of years and the Employer has never previously filled out forms TL2 and T2200 for such employees; that the Union has not explained the type of expenses that the delivery employees may be able to claim for tax purposes; and that the Employer wishes to avoid incurring administrative costs associated with completing the mentioned forms if they are not needed to support tax claims.

Our Comments

The particular circumstances in your letter on which you have asked for our views pertain to a factual situation. As explained in Information Circular 70-6R4, it is not this Directorate's practice to comment on proposed transactions other than in the form of an advance income tax ruling. As regards situations involving completed transactions, all relevant facts and documentation should be submitted to the local tax services office for their views. However, we are prepared to offer the following general comments, which may be of assistance.

Subsection 8(2) of the Income Tax Act (the "Act") provides that only expenses which are expressly permitted under section 8 of the Act can be deducted in computing income from an office or employment. In order to support expense claims, employees may be required to file certain forms. One of the purposes of requiring an employee to file a form such as the T2200 and the TL2 duly signed by the employer and certifying specific conditions of the employee's employment, is to assist the employee in ascertaining and substantiating those expenses that he or she is entitled to claim.

We would expect employers to complete forms in situations where the employees have reasonable grounds to make claims. However, we would not expect an employer to complete the above forms where all the related deductions clearly do not apply to its employees. In this regard, we also note that, for instance, subsection 8(10) of the Act refers to certification that certain conditions "were met," not certification that the conditions were not met.

Disagreements between employers and unions over their employees' eligibility to make certain tax claims and the employers' requirement to complete supporting tax forms are usually resolved to the mutual satisfaction of the employers, unions and employees. In those situations where employers and unions are unsure whether certain amounts can be deducted by the employees for tax purposes and therefore, whether the employers should complete the tax forms, they are encouraged to contact the local tax services office for assistance.

Employment expenses that may be deducted are discussed in a number of CCRA's publications such as the guide T4044, Employment expenses; Interpretation Bulletins IT-522R, Vehicle, Travel and Sales Expenses of Employees, and IT-352R2, Employee's Expenses, Including Work Space in Home Expenses; and Information Circular IC-73-21R7, Away-from-home Expenses. The former 80% limitation for eligible expenses imposed by section 67.1 of the Act and referred to in IC 73-21R7 should be replaced with a 50% limitation for expenses incurred after February 21, 1994.

We trust that our comments will be of assistance to you.

Yours truly,

Milled Azzi, CA
For Director
Business and Partnerships Division
Income Tax Rulings Directorate
Policy and Legislation Branch

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