18 July 2012 External T.I. 2011-0425961E5 - Transportation costs for Special/Remote Work Sites

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: 1. Whether transportation costs incurred by employees to travel to/from a special work site/remote location are deductible in computing income. 2. Whether a completed form T2200 which specifies that travel is a requirement of employment is sufficient for an employee to deduct the travel costs incurred.

Position: 1. Question of fact, but likely no. 2. No.

Reasons: 1. The deduction of travel costs under paragraphs 8(1)(h) and 8(1)(h.1) of the Act is limited to situations where (among other things) an employee was ordinarily required to carry on the duties of employment away from the employer’s place of business or in different places. In this instance, employees ordinarily reported for work at a fixed place of business (a field office) of the employer. 2. While the completion and authorization of Form T2200 by an employer is a prerequisite for an employee to be able to claim a deduction, it does not provide an employee with any assurance that the expenses so incurred are deductible under the Act.

XXXXXXXXXX
2011-042596
T. Baltkois

July 18, 2012

Dear XXXXXXXXXX:

Re: Transportation to Special/Remote Work Sites

We are writing in response to your email dated October 27, 2011, in which you asked whether expenses incurred by employees to travel to and from a special work site or remote work location are deductible in computing the employee’s income under the Income Tax Act (“the Act”).

Our Comments

When considering the deductibility of travel expenses or motor vehicle expenses under paragraphs 8(1)(h) and (h.1) of the Act, one of the factors that must be considered is whether the employee’s place of work is considered to be his or her “regular place of employment.”

It is the position of the Canada Revenue Agency (the “CRA”) that the cost of travelling between an employee’s home and the place where he or she regularly reports for work is personal and would not be considered travelling in the course of employment. This position is confirmed in paragraph 14 of IT-522R, Vehicle, Travel and Sales Expenses of Employees. Generally, it is the view of the CRA that any location to which an employee regularly reports for work or performs the duties of the office or employment is considered to be a regular place of employment. Paragraph 32(c) of IT-522R states that an employer's place of business is generally considered to have reference to a permanent establishment of the employer such as an office, factory, warehouse, branch, or store, or to a field office at a large construction job.

It is unlikely that the travel expenses incurred by an employee in the situation described would satisfy the conditions of paragraphs 8(1)(h) or (h.1) of the Act. In the situation described, the work location, albeit remote, is one to which the employees regularly report for work.

Where an employee meets the conditions of paragraphs 8(1)(h) or (h.1) of the Act, subsection 8(10) of the Act requires an employee to obtain a completed Form T2200 from his/her employer. We note that although the signing of Form T2200 by the employer is a prerequisite for an employee to claim a deduction for employment expenses, a signed Form T2200 does not provide an employee with any assurance that the expenses incurred are deductible since the Act contains other criteria that the employee must satisfy.

We trust these comments will be of assistance to you.

Yours truly,

Nerill Thomas-Wilkinson
Manager
for Director
Reorganizations Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch