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 the interpretation of the phrase "meeting customers" in subparagraph 8(13)(a)(ii) of the Act includes meetings by email, telephone, and skype?
Reasons: The ordinary meaning of the word "meet" is used when interpreting the phrase "meeting customers". "Meet" is defined as "encounter (a person or persons) by accident or design; come face to face with".
December 10, 2013
Re: Home office expenses
We are writing in response to your emails of February 26 and 28, 2013, concerning the meaning of the phrase "meeting customers or other persons" in subparagraph 8(13)(a)(ii) of the Income Tax Act (Act). More specifically, you have enquired whether the interpretation of the phrase "meeting customers" should reflect modern technology and include meetings by such means as email, telephone, and skype.
In your opinion, technical interpretation 2009-0337751I7 does not reflect the current business environment. This document confirms the Directorate's interpretation that the phrase "meeting customers or other persons", as used in subsection 8(13) of the Act, includes only face to face encounters. It is your view that technology has significantly changed over the past number of years and many businesses no longer require face to face meetings. Furthermore, certain business environments never require face to face meetings.
This technical interpretation provides general comments about the provisions of the Act and related legislation (where referenced). It does not confirm the income tax treatment of a particular situation involving a specific taxpayer but is intended to assist you in making that determination. The income tax treatment of particular transactions proposed by a specific taxpayer will only be confirmed by this Directorate in the context of an advance income tax ruling request submitted in the manner set out in Information Circular IC 70-6R5, Advance Income Tax Rulings.
Generally, an employee may deduct home office expenses under paragraphs 8(1)(f) or (i) of the Act if the requirements of subsections 8(10) and (13) of the Act are satisfied. As outlined in Paragraph 2 of Interpretation Bulletin IT-352R2, Employee's Expenses, Including Work Space in Home Expenses, subsection 8(13) of the Act requires that the home office must either be:
(a) the place where the individual principally (more than 50% of the time) performs the office or employment duties; or
(b) used exclusively during the period to which the expenses relate to earn income from the office or employment and, on a regular and continuous basis, for meeting clients or other persons in the ordinary course of performing the office or employment duties.
The phrase "meeting customers" is not defined in the Act. Where the legislation does not define a phrase, we generally rely on case law and the ordinary meaning (e.g. dictionary definition).
The position in technical interpretation 2009-0337751I7 is based on the ordinary meaning of the words "meeting" and "meet". The Oxford Canadian dictionary defines "meeting" as "an assembly of people" and defines "meet" as "a. encounter (a person or persons) by accident or design; come face to face with, b. (two or more people) come into each other's company by accident or design".
We recognize that some informal Tax Court of Canada decisions have held that the phrase "meeting customers" may include meetings held by telephone; however, section 18.28 of the Tax Court of Canada Act states that informal Tax Court of Canada decisions should not be treated as a precedent for any other case.
We have considered these informal decisions, your comments, and the policy intent of subsection 8(13) of the Act, and our interpretation remains unchanged. The ordinary meaning of the words "meet" and "meeting" continue to apply to the interpretation of the phrase "meeting customers" in subsection 8(13) of the Act. That is, the phrase "meeting customers or other persons" as used in subsection 8(13) of the Act includes only face to face encounters.
The role of the Canada Revenue Agency is to administer and enforce the Act as passed by Parliament. Amendments to the Act are the responsibility of the Department of Finance. Should you wish to pursue your concerns further, you may write to the officials in the Tax Policy Branch at the Department of Finance, L'Esplanade Laurier, 140 O'Connor Street, Ottawa, Ontario, K1A 0G5.
We trust these comments will be of assistance.
Nerill Thomas-Wilkinson, CPA, CA
Business and Employment Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch
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