6 June 1995 Internal T.I. 9502987 - WORK SPACE 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.

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:

Whether a T2200 may be issued to an employee that is an auditor whose duties are performed for the most part at the taxpayer's place of business and at an office established in the home.

Position TAKEN:

Yes, as long as there is a requirement, as a condition of employment, that the employee supply such a work space in the home.

Reasons FOR POSITION TAKEN:

Subsection 8(10) of the Act requires, in order to support a claim for office in the home expenses, a T2200 that will attest to the requirements of subparagraph 8(1)(i)(iii) having been met. It does not require that the further limitations set out in subsection 8(13) of the Act be considered.

			June 6, 1995

	London Tax Services	HEADQUARTERS
	Finance and Administration Division			J.A. Szeszycki
(613) 957-8953
	Attention: D.A. Lowry
		950298

Office in the Home Expenses

This is in reply to your memorandum of January 30, 1995, and further to a subsequent telephone conversation (Szeszycki/Lowry), in which you requested our comments concerning the entitlement of certain employees working at home to a claim for office in the home expenses. We regret the delay in responding to your enquiry.

Your enquiry related specifically to a scenario involving a departmental field auditor. The auditor is provided with non-designated common office space within the tax services office; however, its use is minimal. The auditor's duties of employment are performed substantially in the field (i.e., at the taxpayer's place of business or the location of the books and records) and at an office established in the auditor's home.

You have asked several questions concerning the auditor's entitlement to claim expenses for an office in the home as well as the appropriateness of the Department's provision of a signed certification (form T2200) to the auditor, a form which is required by virtue of subsection 8(10) of the Income Tax Act (the Act) to accompany the claim for expenses. As noted in our telephone conversation, some of the questions raised are administrative in nature and we referred you to Mr. Wayne Adams of Headquarters Audit Directorate as the person dealing with those aspects of the issue.

You have asked whether the signing of the form T2200 by the Department indicates its approval of the claim being made by the employee in respect of the office in the home expenses. As indicated earlier, the certification by the employer is required by subsection 8(10) of the Act in order to support any claim for a deduction under paragraphs 8(1)(f), (h) or (h.1) or subparagraphs 8(1)(i)(ii) or (iii) of the Act. A claim for an office in the home is made under subparagraphs 8(1)(i)(ii) or (iii) which restricts claims to those which the employee is required by the contract of employment to supply and pay for. Item # 10(a) of the prescribed form T2200 simply asks the employer whether the employee was required under a contract of employment to use a portion of his or her home. If there is, in fact, a contract or agreement between the employer and the employee which sets out the use of the home work space as one of the conditions of employment (whether part of the main contract or a separate agreement) then the employer may so certify. Although subsection 8(13) of the Act contains further restrictive conditions involving the extent to which the work space in the home is used in the performance of employment duties, subsection 8(10), in our view, does not require these to be considered in assessing the employer's obligations in providing the certification.

Even though a T2200 certification is provided to an employee, based on the principles discussed above, there remains the question of whether a particular employee is precluded from claiming a deduction for the factual use of the work space in the home. Subsection 8(13) of the Act provides that no amount is deductible under paragraph 8(1)(i), notwithstanding that the general requirements set out therein are met, unless, as one of the specified alternatives set out in that subsection, the work space is the place where the employee principally performs the duties of the office or employment. The term "principally", for the purposes of the Act, is taken to mean in excess of fifty percent. Whether that condition is met by any particular employee involves a factual determination.

It is our understanding of the general guidelines for conducting a field audit that the bulk of the time spent in the audit process is at the taxpayer's place of business or the location where the books and records can be found. In other words, that is where the duties of employment are principally performed. Where that is indeed the case for a particular employee, then subsection 8(13) of the Act would preclude a claim in respect of the work space in the home even though he or she may have been provided with a signed T2200.

P.D. Fuoco
Section Chief
Personal and General Section
Business and General Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch

c.c. Wayne Adams - H.O. Audit Directorate

Rm. 801, MacDonald Building