30 April 2003 External T.I. 2003-0006085 - TRAVEL 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 CCRA.

Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ADRC.

Principal Issues: Whether travelling expenses of an employee between home and a job site should be allowed a deduction in a specific situation.

Position: No.

Reasons: The taxpayer is not travelling in the course of the office or employment as the job site is a place where he regularly reports for work.

XXXXXXXXXX 2003-000608

P. Massicotte, CA, M.Fisc.

April 30, 2003

Dear XXXXXXXXXX:

Re: Travelling Expenses

This is in response to your letter of March 3, 2003, requesting our comments in connection with the deductions under paragraphs 8(1)(h) and (h.1) of the Income Tax Act (the "Act") for travelling expenses of a taxpayer in a specific situation.

The facts as we understand them are as follows:

1. The taxpayer has a permanent residence in XXXXXXXXXX, at which his wife and children reside.

2. In XXXXXXXXXX, the taxpayer secured employment with a company to XXXXXXXXXX (the "job site"). The contract of employment is expected to last until XXXXXXXXXX.

3. Because of the distance, the taxpayer cannot return daily from his job site to his permanent residence in XXXXXXXXXX.

4. The taxpayer has been renting a hotel room near the job site and has been travelling back and forth between the rented accommodations and his permanent residence on weekends. It is our understanding that the employer pays the rent for the rented accommodations.

You ask whether the expenses the taxpayer incurs when he travels between his permanent home and the rented accommodations may be allowed a deduction under paragraph 8(1)(h) or 8(1)(h.1) of the Act.

Our Comments

The particular situation outlined in your letter appears to be a factual one, involving specific taxpayers. As explained in Information Circular 70-6R5, it is not this Directorate's practice to comment on proposed transactions involving specific taxpayers other than in the form of an Advance Income Tax Ruling. Should your situation involve a specific taxpayer and a completed transaction, you should submit all relevant facts and documentation to the appropriate Tax Services Office for their views. However, we are prepared to provide you with the following general comments.

As you may know, an employee may only deduct in determining income from employment those reasonable outlays and expenses that are specifically permitted under section 8 of the Act. A deduction for amounts expended by employees in a year in respect of expenses incurred for travelling in the course of an office or employment is allowed under paragraph 8(1)(h) or (h.1) of the Act where inter alia an employee is required under the contract of employment to pay for travel expenses (paragraph 8(1)(h) of the Act) or the motor vehicle expenses (paragraph 8(1)(h.1) of the Act) incurred in the performance of the duties of the office or employment. The employee must also be ordinarily required to carry on the duties of the office or employment away from the employer's place of business or in different places.

Consistent with the comments in paragraphs 14 and 49 of Interpretation Bulletin IT-522R, "Vehicle, Travel and Sales Expenses of Employees" (an electronic copy of which may be found on Internet at: www.ccra-adrc.gc.ca), it is generally our position that travelling between an employee's home and the place where he or she regularly reports for work is personal and not considered "travelling in the course of the office or employment" or travelling "in the performance of the duties of the office or employment". Amounts expended in respect of travel between home and a regular place of work are therefore not deductible.

Whether an employee regularly reports for work at a particular location is a question of fact requiring a review of all the relevant facts of each case. An employee who reports to work at a particular site for an extended period of time will likely be considered to regularly report to work at such location. On the other hand, even though an employee may change location on a frequent basis, it will also be relevant to consider whether such employee reports for work at a particular location more than once, and the frequency of such returns. In our view, an employee may have more than one regular place of employment and, in fact, it is the nature of some employment situations that more than one location may be viewed as a regular workplace.

These comments are also consistent with the decision in Lorne Nelson v. MNR, 81 DTC 190 (TRB), wherein it is stated at p.192:

"It appears to be logical ..., to consider that the "employer's place of business" as used in section 8(1)(h)(i) of the Act, does not necessarily refer to the employer's head office or any of its administrative offices but refers specifically to that establishment of the employer for which the taxpayer was hired, to which he was assigned and at which he ordinarily reports for work. In other words, the "employer's place of business" should in my opinion be interpreted in relation to the taxpayer."

Based on the limited facts described above, it appears that the taxpayer ordinarily reports for work solely at the job site where his employer is carrying out a contract. As a result, it is our opinion that travelling between home and that job site would not be considered "travelling in the course of the office or employment" or travelling "in the performance of the duties of the office or employment", but would rather be personal and non-deductible.

We trust the above comments are of assistance to you.

Yours truly,

Milled Azzi, CA
for Director
Business and Partnerships Division
Income Tax Rulings Directorate

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