25 March 1992 External T.I. 9205995 F - Office In Home Employee Principally Performs Duties

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.

920599

24(1)                                     R.B. Day

(613) 957-2136

March 25, 1992

Dear 19(1)

Re:  Subsection 8(13) of the Income Tax Act (the Act)

We are writing in reply to your letter of February 24, 1992, wherein you requested our opinion as to whether or not a salesman would be entitled to claim expenses related to a work space in the home in the following hypothetical situation:

1.     A salesman has an office in the home that is used to arrange appointments with customers and to complete reports.

2.     The salesman is not provided with an office or work space at the company premises and is expected to carry out the job functions described in 1 above, elsewhere.

3.     The salesman's principal duty is to obtain sales orders.  This goal is achieved by keeping customers aware of the effectiveness of existing products and new products coming into the market place. Through this educational process and through continued contact with customers, the salesman can obtain new sales orders.

4.     The salesman always meets customers at their place of business and as a result, may be away from that office anywhere from forty to ninety-five percent of the time, depending on the individual.

In this regard, you observed that the wording in subsection 8(13) of the Act is similar to subsection 18(12) of the Act such that, in your view, the comments in paragraph 2 of Interpretation Bulletin IT-514, regarding self-employed persons who perform their duties away form the work space in the home most of the time, would apply to subsection 8(13) of the Act.  It is also your view that it was the intention of Parliament to treat self-employed persons and employees in a similar manner such that the salesmen in the above scenario should be eligible to claim reasonable expenses for a work space in the home.

Our Comments

In order for an employee to claim any amounts for a work space in the home, the individual must meet the requirements of either of subparagraphs 8(13)(a)(i) or (ii) of the Act.  Since, in the above scenario, it would appear that an employee would not meet the requirements of subparagraph (ii), it would be necessary for an employee to meet the requirements of subparagraph (i).

Although it appears that subsections 18(12) and 8(13) of the Act are similar in their intent, the wording in subparagraph 8(13)(a)(i) of the Act is more restrictive than subparagraph 18(12)(a)(i) of the Act.  For example, in order for a self-employed person to meet the requirements of subparagraph 18(12)(a)(i) of the Act, the individual's work space need only be "the individual's principal place of business".  For purposes of subparagraph 8(13)(a)(i) of the Act, the individual's work space must be "the place where the individual principally performs the duties of the office or employment".  Although the term "principally" is not defined in the Act, we have accepted the view that principally means most of the time in situations similar to the one under discussion.

With respect to the above scenario, it would involve a finding of fact in each particular case as to whether or not a particular individual "principally performs the duties of the office or employment" at the work space in the home for purposes of subparagraph 8(13)(a)(i) of the Act.  In this regard, the employee must be required by the contract of employment to maintain an office in the home and pay for the expenses of maintaining that office.

We regret that we are unable to give you a definitive response to your enquiry.

Yours truly,

P.D. Fuocofor DirectorBusiness and General DivisionRulings DirectorateLegislative and IntergovernmentalAffairs Branch

c.c.  P. McNally, Enquiries and Taxpayer Assistance Division