27 April 1995 External T.I. 9505825 - EMPLOYMENT EXPENSES - AUTOMOBILE

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:

Clarification of employment relationship with the Rural Municipality of XXXXXXXXXX and the consequent requirements for withholding from his remuneration. In addition, the consequences of using his own vehilcle in carrying out his duties as administrator.

Position TAKEN:

Appears to be in an employer/employee relationship.

Normal withholding required by the Municipality for tax, C.P.P and U.I. Duties of employment require use of own automobile - no allowance - expenses can be claimed - T2200 required.

Reasons FOR POSITION TAKEN:

It was clear from his description of the job requirements and responsibilities that there existed a master/servant relationship.

		950582
XXXXXXXXXX	J.A. Szeszycki

Attention: XXXXXXXXXX

April 28, 1995

Dear Sirs:

Re: Employment Contract

This is in reply to your letter of March 2, 1995 and further to our telephone conversation of March 3rd (Szeszycki/XXXXXXXXXX) in which we clarified the nature of your enquiry. You also made reference in your letter to our previous response dated November 25, 1993 concerning the tax treatment of an automobile allowance received from your employer, the Rural Municipality of XXXXXXXXXX (the "Municipality").

In your letter you were unclear as to the whether your relationship with the Municipality was that of employer/employee; however, from our discussions we could draw the reasonable conclusion that such was in fact the case. In addition, the duties of your position require the extensive use of your automobile.

Since you are considered an employee of the Municipality for tax purposes, the Municipality, as your employer, will be required to withhold computed amounts from your periodic salary payments on account of income tax, Canada Pension Plan contributions as well as contributions for unemployment insurance.

Based on the information provided in your correspondence, it would appear that you are ordinarily required to carry on the duties of your employment away from your employer's place of business or in different places. You also advised that you are no longer in receipt of an automobile allowance, as was the case when you previously wrote to us in 1993. Accordingly, you are entitled to claim, on your income tax return for the year, reasonable automobile expenses incurred in carrying out the duties of your employment. In that connection, for return filing purposes, you should request at that time that the Municipality, as your employer, complete form T2200 certifying the requirement on your part that you use your vehicle to carry out your employment duties and that you are required to pay the expenses of using the vehicle. We would emphasize, however, that these requirements to use your own vehicle and pay the costs does not alter the employer/employee relationship that you have with the Municipality.

We hope the foregoing comments are of assistance.

Yours truly,

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