22 July 1994 External T.I. 9412045 - EMPLOYMENT EXPENSES AND TEACHERS' SUPPLIES

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.

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.

Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.

Principal Issues:

Deductibility of teacher's supplies under 8(1)(i)(iii)

Position TAKEN:

Question of Fact. If there is no requirement either express or "implied" for the teachers to be responsible for the expenses, they do not qualify. In addition, all other provisions of the subparagraph must be met.

Reasons FOR POSITION TAKEN:

Question of Fact as to whether or not there is a requirement.

			941204
XXXXXXXXXX	D. Zion

Attention: XXXXXXXXXX

July 22, 1994

Dear Sirs:

Re: Employment Expenses and Teachers' Supplies

We are writing in response to your letter of April 28, 1994 regarding the above-noted subject. You have requested a ruling regarding the deductibility of certain expenses incurred by teachers to purchase supplies for use in their classrooms based on information you have obtained from our correspondence of January 14, 1994, to

XXXXXXXXXX

In the comments that follow, unless otherwise stated, all statute references are to the Income Tax Act S.C. 1970-71-72, c.63 as amended, consolidated to June 10, 1993 (the Act).

We would first like to clarify that our letter of January 14, 1994 to XXXXXXXXXX was not a ruling. In response to XXXXXXXXXX enquiry regarding the deductibility of certain employment expenses and a request for further information, we provided general comments regarding the position of the Department. This included a discussion of the requirements which must be met in order for an employer to make a determination as to whether or not the taxpayer meets the conditions set out in subparagraph 8(1)(i)(iii) of the Act. Once the employer determines that these requirements have been met, then the prescribed form (T2200) signed by the taxpayer's employer or an individual authorized to sign on behalf of the employer must be filed with the taxpayer's income tax return for the year in question.

We have enclosed for your information a copy of Information Circular 70-6R2 (IC 70-6R2) and the subsequent special release dated September 30, 1992 which sets out the guidelines under which advance income tax rulings are issued. As the situation briefly outlined in your correspondence involves completed and ongoing transactions and the main issue is dependent on the facts of a specific case, the deductibility of these expenses should be discussed with an audit official of your local district taxation office. We are therefore not in a position to give you a ruling nor a definitive response. We will however, provide the following general comments which may be of assistance to you.

Paragraph 1 of IT-352R Employees' Expenses Incurred in Performing Duties of Office or Employment, a copy of which you enclosed with your enquiry, discusses in detail the provisions of subparagraph 8(1)(i)(iii) of the Act which must be met in order for an employee to be able to deduct qualifying expenses. Such expenses are deductible to the extent that the individual has not been reimbursed and is not entitled to be reimbursed.

You comment that your review of the conditions of employment of teachers of your school board, indicates that they do not meet the requirements of subparagraph 8(1)(i)(iii) of the Act and, as a result, the T2200 should not be signed. We are in agreement with your comments that, if there is no requirement either express or "implied" for the teachers to be responsible for the expenses, they do not qualify. In order to determine if an expense incurred by an employee, which was not expressly required in the contract was actually an implied requirement, the Courts have reviewed whether or not the failure to meet the requirement could result in the cessation of employment, poor performance evaluation or other disciplinary action on the part of the employer. This is a question of fact to be determined upon a review of the circumstances.

We are enclosing a copy of the 1993 Employment Expenses Guide and direct your attention specifically to page 9 which discusses expenses incurred for supplies and work space in the home. You will note from the comments under the heading "Supplies" that the cost of any capital equipment such as a computer is not deductible.

As mentioned above, should you have any questions, please do not hesitate to contact your local district taxation office for assistance.

We trust that our comments have been of assistance.

P.D. Fuoco
for Director
Business and General Division
Rulings Directorate
Policy and Legislation Branch