7 January 2003 External T.I. 2002-0174295 - EMPLOYMENT 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: Is the cost of special clothing worn by employees in the performance of their duties deductible under subparagraph 8(1)(i)(iii) of the Act?

Position: No.

Reasons: Longstanding position of the Canada Customs and Revenue Agency and has generally been supported by the courts.

XXXXXXXXXX 	2002-017429
		Karen Power, CA
January 7, 2003

Dear XXXXXXXXXX:

Re: Employment Expenses

We are writing in response to your letter of November 14, 2002 concerning the application of subparagraph 8(1)(i)(iii) of the Income Tax Act (the "Act").

Subparagraph 8(1)(i)(iii) of the Act allows, subject to certain conditions, a deduction in computing income from an office or employment for the cost of supplies that were consumed directly in the performance of the duties of the office or employment.

As mentioned in paragraph 10(c) of Interpretation Bulletin IT-352R2, the cost of supplies does not include the cost of special clothing worn by employees in the performance of their duties. This represents a longstanding position of the Canada Customs and Revenue Agency and has generally been supported by the courts (see the decision in the case of Luks v. MNR, 58 DTC 1194 (Ex. Ct.); Cuddie et al. v. The Queen, 98 DTC 1822 (TCC); Ellis v. The Queen, 98 DTC 1885 (TCC); Crawford v. The Queen, 2000 DTC 3583 (TCC)).

The Fardeau case to which you make reference was heard under the Informal Procedure. Section 18.28 of the Tax Court of Canada Act provides that decisions rendered under this procedure do not have precedential value. Therefore, we do not intend to change the position outlined in paragraph 10 of Interpretation Bulletin IT-352R2 as a result of this decision.

We trust 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