Income Tax Severed Letters - 2018-12-10

Technical Interpretation - External

9 November 2006 External T.I. 2006-0185451E5 - Employee motor vehicle deduction

Unedited CRA Tags
6(1)(b) 8(1)(h.1)

Principal Issues: 1) How should an employer complete Questions 1 & 2 on the T2200?
2) Can the employee forego the employer's motor vehicle allowance and instead claim the deduction under paragraph 8(1)(h.1)?

Position: 1) If the employee is regularly required to travel between the employer's two places of business, during the course of the workday, then Question 2 on form T2200 should be answered in the affirmative. The answer to Question 1 on Form T2200 will depend on whether the employee is entitled to a reasonable allowance for motor vehicle expenses incurred for employment purposes.
2) If the employer's motor vehicle allowance is reasonable, no.

Reasons: 1) Subparagraph 8(1)(h.1)(i) requires that the employee be ordinarily required to travel to different places to carry out employment duties. This means that only if the travel to the employer's different business locations during the course of the workday is a normal occurrence, would this condition be met. Working a couple of days as week in one office and a couple of days a week in the other office, and travelling from home to each such location would not satisfy this requirement.
2) If the employer offers a reasonable allowance for motor vehicle expenses incurred by an employee in the performance of employment duties, then it cannot be said that the employee is required to pay for such expenses. As such, the requirement in subparagraph 8(1)(h.1)(ii) would not be met and the employee would not be entitled to claim a deduction in respect of motor vehicle expenses.