5 August 2004 External T.I. 2004-0073111E5 - Parking Expenses for Employees

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.

Principal Issues: Whether employees can deduct expenses incurred for parking at the employer's place of business where they regularly report for work.

Position: No.

Reasons: No provision of section 8 of the Act allows for such a deduction. Expenses not incurred for travelling in the performance of the duties of employment. Travel from home to the employer's place of business is a personal expense.

XXXXXXXXXX 2004-007311

P. Massicotte, CA, M.Fisc.

August 5, 2004

Dear XXXXXXXXXX:

Re: Parking Expenses

We are writing in reply to your email of April 22, 2004 requesting our views in connection with the deduction of parking expenses under the Income Tax Act (the "Act") by employees of the XXXXXXXXXX (the "City").

You mention that certain employees of the City are required to have available an automobile as part of the duties of their employment. These employees report to work at the same location each day but, on occasion, are required to travel away from that location to make home visits to clients. Since it is a condition of their employment to have an automobile available at all times, the employees submit that the expenses they incur each day for parking at their regular work location should be deductible. You ask us to clarify whether such expenses are deductible.

Our Comments

The circumstances outlined in your letter relate to a specific fact situation. As explained in Information Circular 70-6R5, dated May 17, 2002, this Directorate does not comment on transactions involving specific taxpayers except by way of an advance income tax ruling in respect of proposed transactions. When the situation involves a specific taxpayer and a completed transaction, the question should be directed to the appropriate Tax Services Office for their views, along with all relevant facts and documentation. However, we are prepared to provide you with the following general comments.

As indicated in the Employment Expenses Guide for 2003 (T4044), it is generally our position that the cost to employees for parking at the employer's office where they regularly report for work is a personal expense and is not deductible.

As you may know, when calculating income from employment, an employee may only deduct those reasonable outlays and expenses that are specifically permitted under section 8 of the Act. There is no provision in section 8 of the Act that specifically allows the deduction of parking expenses incurred by employees. Where, however, such expenses are incurred while travelling in the course of the office or employment, they may be deductible under paragraph 8(1)(h) of the Act where inter alia the employee is required, under the contract of employment, to pay for the travel expenses incurred in the performance of the duties of the office or employment and is 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 our website at: www.cra-arc.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 "in the performance of the duties of the office or employment". When considering whether an employee is ordinarily required to carry on the duties of the employment away from the employer's place of business, it is our opinion that the word "ordinarily" means "customarily" or "habitually" rather than "continually," but there should be some degree of regularity in the travelling that the employee is required to do, as indicated in paragraph 32 of IT-522R.

We trust the above comments are of assistance to you.

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