25 August 2009 External T.I. 2009-0313371E5 - Motor Vehicle 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.

Principal Issues: Whether motor vehicle expenses for travel between an employee's home and place of work are deductible.

Position: Question of fact but generally not deductible.

Reasons: Such travel is generally personal travel and not travel undertaken in the course of employment.

XXXXXXXXXX 								2009-031337
									Michael Cooke, CA
August 25, 2009

Dear XXXXXXXXXX :

Re: Motor Vehicle Expenses

This is in response to your email correspondence of March 11, 2009, wherein you requested our comments in connection with the deduction of motor vehicle expenses under paragraph 8(1)(h.1) of the Income Tax Act (the "Act").

The facts in your correspondence are somewhat limited. Briefly, we understand a company (the "Employer") has a number of employees, who were hired to perform all, or virtually all, of their duties of employment at one to XXXXXXXXXX store locations within a pre-assigned region. The stores are operated by a customer of the Employer. Generally, an employee works at a different store location each day alternating between the one to XXXXXXXXXX stores so assigned throughout the week. Each employee is required to pay for his or her own transportation costs. You ask whether the transportation costs for travel between an employee's home and the particular store location where such employee is regularly required to perform his or her duties of employment for the Employer would be deductible under paragraph 8(1)(h.1) of the Act.

Written confirmation of the tax implications inherent in particular transactions is given by this Directorate only where the transactions are proposed and are the subject matter of a request for an advance income tax ruling submitted in the manner set out in Information Circular 70-6R5, "Advanced Income Tax Rulings", dated May 17, 2002. This Information Circular and other Canada Revenue Agency ("CRA") publications can be accessed on the internet at http://www.cra-arc.gc.ca. Where the particular transactions are complete, the inquiry should be addressed to the relevant tax services office, a list of which is available on the "Contact Us" page of the CRA website.

Since the situation described in your correspondence deals with a completed transaction involving specific taxpayers and we because do not have sufficient information to conclusively determine whether a particular work location would be regarded as a particular employee's regular place of employment a definitive opinion cannot be expressed. However, we are prepared to offer the following comments.

Our Comments

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 an employee in a year in respect of motor vehicle expenses incurred for travelling in the course of an office or employment is allowed under paragraph 8(1)(h.1) of the Act where, inter alia, the employee is:

(i) ordinarily required to carry on the duties of the office or employment away from the employer's place of business or in different places, and

(ii) required under the contract of employment to pay motor vehicle expenses incurred in the performance of the duties of the office or employment.

As indicated in paragraphs 14 and 49 of Interpretation Bulletin IT-522R, "Vehicle, Travel and Sales Expenses of Employees" travelling between an employee's home and the place where that employee regularly reports for work is generally considered to be personal travel and not "travelling in the course of the office or employment".

Where an employee reports to work at a particular work location or at more than one particular work location for an extended period of time or frequency, each such work location will likely be considered as that employee's regular place of employment.

The following comments relating to the "employer's place of business" in the decision of Lorne Nelson v. MNR, 81 DTC 190 (TRB), are also relevant (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 circumstances described in your correspondence the expenses incurred by an employee for travelling between home and the particular stores where he or she regularly performs the duties of his or her employment would be considered as personal. As such, these expenses would not deductible under paragraph 8(1)(h.1) of the Act.

We trust our comments will be of assistance to you.

Yours truly,

Rob Ferrari
for Director
Business and Partnerships Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch