6 October 1993 External T.I. 9322445 F - Workspace in the Home

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.

931244 XXXXXXXXXX

Dear Sir:

RE:  Workspace in the Home Deduction

This is in reply to your letter of April 15, 1993 concerning whether you are entitled to deduct expenses in respect of workspace in your home. We apologize for the delay in replying.

You have indicated that you are employed as a pilot by an airline company. In order to conduct a flight, a company pilot must maintain a thorough knowledge of aviation regulations, operating instructions, navigational maps, charts and instructions in respect of various areas, and administrative and general instructions which are issued from time to time by the employer.

Competency in the above areas as well as piloting skills is determined by carrying out various tests on a regular basis. If a pilot fails to achieve the required level of competence in any of the tests, he or she is suspended from pilot duties. In the event that the appropriate level of competency cannot be obtained through extra training as the employer may wish to provide, the pilot will then be dismissed.

In connection with the level of skills and knowledge required, you have mentioned that the employer provides the pilot with numerous manuals which the pilot is expected to update and maintain. You have also indicated that since the employer does not provide space to store the manuals and an area is not provided where the manuals might be updated and maintained or used for study purposes, it is the employer's expectation that storage, maintenance and use of the manuals will be primarily at the residence of the pilot. No compensation is provided by the company for this requirement.

With respect to the above circumstances, you have indicated that there is a de facto contractual arrangement for a pilot of the employer to use a portion of his or her home as a work space. Accordingly, the employer should prepare a Form 2200 in respect of a pilot which would indicate that a pilot was required to maintain an office away from the employer's place of business.

Our Comments:

At the outset, we are mentioning that since Form T2200 must be prepared by an employer before an employee is entitled to claim certain expenses, the comments set out below must be considered from that perspective.

There are a number of requirements that must be satisfied before an employee is entitled to deduct certain types of maintenance costs in connection with workspace in the home. One such requirement is that the employee be required by the contract of employment to provide such workspace. Ordinarily, this requirement necessitates that there be an express requirement within the terms of a written contract of employment. Nevertheless, it is the Department's general position that this requirement may also be considered to have been satisfied where it is tacitly understood by the employer and the employee that the workspace be provided by the employee.

However, based on the information made available, it seems probable to us that another requirement would not be satisfied. This requirement, which is stated on page 9 of the Employment Expense Guide as follows: "The work space is where you mainly do your work". Generally, this requires that the employee spend more than 50% of his or her time carrying out the employment duties at the work space. This test alone may not always be totally determinative of whether or not an individual's employment duties were mainly carried out at a work space in the home. In any particular situation, it may also be necessary to consider the employment responsibilities involved and the various types and amount of employment duties carried out at the work space in relation to those carried out elsewhere. In view of this requirement, however, it would appear most unlikely that an individual employed as a pilot would mainly carry out such employment duties in the home work space.

If further assistance is required concerning whether or not a Form T2200 should be prepared in respect of work space in the home, a submission should be made to this Department by the employer since the employer is required to certify that the necessary conditions have been met in respect of a particular employee. The submission should be sent to the Ottawa District Office to the attention of Mr. P. Allard (Tel. 598-2033) of Client Assistance. The address of is set out below:

Ottawa District Office 360 Lisgar Street Ottawa, Ontario K1A 0L9

While we regret that we could not provide you with a more definitive reply at this time, we trust that the foregoing comments will be of assistance in determining whether Form T2200 should be prepared.

Yours truly,

P.D. Fuoco for DirectorBusiness and General DivisionRulings DirectorateLegislative and Intergovernmental Affairs Branch

cc:      Ottawa District Office