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 an employee is entitled to deduct motor vehicle expenses? 2. Is an employer obligated to complete and sign Form T2200 for a particular employee?
Position: 1. & 2. Question of fact.
Reasons: 1. An employee is entitled to deduct motor vehicle expenses incurred in the year for employment travel provided the amounts are reasonable in the circumstances, all conditions of paragraph 8(1)(h.1) of the Act are met (employee must be required to carry on his/her employment duties away from the employer’s place of business, the employee must be required to bear those travel expenses, the employee must not have received a motor vehicle allowance from his/her employer that was not included in income because of paragraph 6(1)(b) of the Act), and the employer has signed Form T2200. 2. An employer must be reasonably certain that an employee meets the conditions before signing Form T2200.
September 7, 2012
Re: Obligation to Complete Form T2200
We are writing in response to your letter of September 19, 2011, concerning motor vehicle expenses. More specifically, you have enquired whether you are entitled to deduct your motor vehicle expenses and if an employer is obligated to complete Form T2200, Declaration of Conditions of Employment for an employee.
In the situation you described, you are entitled to a reimbursement for mileage from your employer, but you chose not to claim the reimbursement. You have requested your employer provide a signed Form T2200, but your request has been refused.
Paragraph 8(1)(h.1) of the Income Tax Act (Act) permits an employee to deduct amounts spent in the year for motor vehicle expenses provided the amounts are reasonable in the circumstances and the following mandatory conditions are met:
- The employee must be required by the terms of his or her employment to travel to work somewhere other than the employer’s place of business or in different places (a requirement of subparagraph 8(1)(h.1)(i) of the Act);
- The employee must be obligated to pay those motor vehicle expenses incurred in performing the duties of employment (a requirement of subparagraph 8(1)(h.1)(ii) of the Act); and
- The employee must not have received a motor vehicle allowance from his or her employer that was not included in income because of paragraph 6(1)(b) of the Act Act (a requirement of subparagraph 8(1)(h.1)(iii) of the Act).
Where all conditions of paragraph 8(1)(h.1) of the Act are met, subsection 8(10) of the Act provides that no amount may be deducted under paragraph 8(1)(h.1) for a year unless the employee obtains Form T2200, signed by the employer certifying that the conditions set out in paragraph 8(1)(h.1) were met for that year.
Consistent with case law (Littlefield v. Her Majesty the Queen, Tax Court of Canada), it is the Canada Revenue Agency’s position that where a reasonable motor vehicle reimbursement is available to the employee for employment related travel, and the employee chooses to forgo an employer’s reasonable motor vehicle reimbursement, he or she would not meet the “obligation to pay” condition in subparagraph 8(1)(h.1)(ii) of the Act and would not be entitled to claim a motor vehicle expense deduction.
Upon signing Form T2200, the employer certifies that certain of the required conditions set out in the provisions of the Act are met. An employer must be reasonably certain that an employee meets the conditions before signing Form T2200. Since you don’t appear to satisfy the condition in subparagraph 8(1)(h.1)(ii), your employer does not have to provide you with a signed Form T2200.
For more information, please refer to Interpretation Bulletin IT-522R Vehicle, Travel and Sales Expenses of Employees.
We trust these comments will be of assistance.
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch
All rights reserved. Permission is granted to electronically copy and to print in hard copy for internal use only. No part of this information may be reproduced, modified, transmitted or redistributed in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, or stored in a retrieval system for any purpose other than noted above (including sales), without prior written permission of Canada Revenue Agency, Ottawa, Ontario K1A 0L5
© Her Majesty the Queen in Right of Canada, 2012
Tous droits réservés. Il est permis de copier sous forme électronique ou d'imprimer pour un usage interne seulement. Toutefois, il est interdit de reproduire, de modifier, de transmettre ou de redistributer de l'information, sous quelque forme ou par quelque moyen que ce soit, de facon électronique, méchanique, photocopies ou autre, ou par stockage dans des systèmes d'extraction ou pour tout usage autre que ceux susmentionnés (incluant pour fin commerciale), sans l'autorisation écrite préalable de l'Agence du revenu du Canada, Ottawa, Ontario K1A 0L5.
© Sa Majesté la Reine du Chef du Canada, 2012