10 November 2004 External T.I. 2004-0082191E5 - Requirement to issue T2200

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: Is a taxpayer obligated to complete T2200's for a particular individual?

Position: Question of fact

Reasons: Form T2200 must be signed by an employer in order for an employee to claim certain deductions. "Employer" is defined in subsection 248(1) as, "in relation to an officer, means the person from whom the officer receives the officer's remuneration". Insufficient facts provided to determine whether the individual is an officer or employee and whether the requirements of paragraph 8(1)(h) or (h.1) have been met.

2004-008219
XXXXXXXXXX Karen Power, CA
(613) 957-8953
November 10, 2004

Dear XXXXXXXXXX:

Re: T2200 - Declaration of Conditions of Employment

We are writing in reply to your letter of May 31, 2004, requesting an advance ruling regarding a taxpayer's obligation to complete form T2200, Declaration of Conditions of Employment.

Our Comments

Written confirmation of the tax consequences that apply to a particular fact situation is given by this directorate only in the context of an advance ruling request submitted in the manner set out in Information Circular 70-6R5. As stated in paragraph 7 of Information Circular 70-6R5, advance income tax rulings are provided on proposed transactions only. We are unable to issue income tax rulings on completed transactions. Where the particular transactions are partially completed or completed, the enquiry should be addressed to the relevant tax services office. Nonetheless, we are prepared to provide the following general comments that we hope will be of assistance.

"Employer" is defined in subsection 248(1) of the Income Tax Act (the "Act") as, "in relation to an officer, means the person from whom the officer receives the officer's remuneration". An "office" is defined in subsection 248(1) of the Act to include, inter alia, any position that entitles an individual to a fixed or ascertainable stipend or remuneration. It also includes positions where the incumbent is elected or appointed in a representative capacity. Further, an "employee" is defined in subsection 248(1) of the Act to include an officer.

The determination of whether an individual is an officer or employee of a particular taxpayer requires a review of all relevant facts of each case. If you require assistance in making such a determination all relevant facts and documentation should be sent to the appropriate tax services office.

The responsibility of your client to complete Form T2200 for a particular individual is dependant upon the above determination regarding the relationship that exists between your client and the individual. Form T2200 is the prescribed form which must, pursuant to subsection 8(10) of the Act, be signed by an employer in order for an employee to claim deductions for expenses under paragraph 8(1)(c),(f),(h) or (h.1) or subparagraph 8(1)(i)(ii) or (iii) of the Act. Upon signing the form, the employer certifies that certain of the required conditions set out in the above provisions are met.

One of the purposes of requiring an employee to obtain form T2200 duly signed by the employer and certifying specific conditions of the employee's employment, is to ensure that an employee can only deduct those expenses he or she is potentially entitled to deduct. It is incumbent upon the employer to make clear the types of expenses which the employee is required to pay and for which the employee did not receive any allowance or repayment. In other words, the items which an employee seeks to claim may actually be disallowed on the basis that they do not agree with what the employer has certified as actually being required to be paid by the employee.

The T2200 requires the employer to set out the conditions of employment. It does so by asking specific questions, the answers to which will determine whether, or the extent to which, the employee may be entitled to employment deductions under section 8 of the Act. It should be emphasized that the form itself does not require the employer to make that determination, just to certify the conditions of employment. Although the signing of the T2200 by the employer is a prerequisite in order for an employee to be able to claim a deduction for certain employment expenses, a signed T2200 does not provide an employee with any assurance that any expenses incurred are deductible since the Act contains other criteria that the employee must satisfy. We would expect employers to complete the T2200 in situations where the employees have reasonable grounds to make claims. However, we would not expect an employer to complete the above form where all the related deductions clearly do not apply to its employees.

We have not been provided with sufficient information to determine whether the requirements of paragraph 8(1)(h) or (h.1) of the Act have been met in the situation described in your letter. For example it is unclear whether the individual is required under contract to pay for travel expenses and the basis for making a claim is unclear, as it appears that the individual is reimbursed for any expense. For more details, please refer to Interpretation Bulletin IT-522R, Vehicle, Travel and Sales Expenses of Employees.

Copies of Information Circulars and Interpretation Bulletins are available from your local tax services office or on the Internet at the following site - http://www.cra-arc.gc.ca/formspubs/type/menu-e.html.

We trust that our comments are of assistance to you.

Yours truly,

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