28 March 1996 External T.I. 9607405 - WORK SPACE - FORM T2200

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:

1. Whether Form T2200 should be certified where an employee voluntarily uses work space in his or her home in circumstances where the employer provides the employee with an office with respect to his or her day-to-day duties.

2. Whether Form T2200 should be certified with respect to work space in the home on the basis that the employer provides a business telephone and a fax machine in connection with employment duties.

3. Whether the provisions of subsection 8(13) of the Income Tax Act (the Act) need to be considered by an employer in determining whether to certify Form T2200 with respect to work space in the home

Position:

1. No

2. No, this does not establish that the employee was required to maintain an office space in his or her home.

3. No

Reasons:

1. There is no requirement that the employee establish and use a work space in his or her home

2. See comments under position

3. Subsection 8(10) of the Act which deals with certification does not require subsection 8(13) of the Act to be considered.

									960740
XXXXXXXXXX							M. Eisner

Attention: XXXXXXXXXX

March 28, 1996

Dear Sirs:

Re: Form T2200 - Work Space in the Home

This is in reply to your letter of February 22, 1996 concerning the above-noted subject. We also acknowledge our telephone conversation on March 5, 1996 (Eisner/XXXXXXXXXX).

You have indicated that the head office of

XXXXXXXXXX

employs sales and service representatives across Canada to sell and service equipment. In most cases, a representative is provided with a business telephone and a facsimile machine for the purposes of being used in his or her home. An employment contract in respect of such a representative does not cover the provision of these items or whether the representative is required to use a portion of his or her home for employment purposes.

Pursuant to our telephone conversation, it is our understanding that you have three concerns that relate to work space in the home expenses. As discussed in our conversation we are providing general comments on the concerns rather than commenting on a specific situation.

With respect to your first concern, you have asked for our comments on the situation where an employee voluntarily uses a work space in his or her home even though the employer provides the employee with an office with respect to his or her day-to-day employment duties.

Your second concern relates to the determination of whether an employer should answer a question set out under item 10(a) of Form T2200 in the negative or the affirmative. The question asks the employer whether a particular employee was required to rent an office away from the employer's place of business or use a portion of his or her home.

Your third concern relates to two conditions set out in subsection 8(13) of the Income Tax Act (the Act) in respect of which one of the conditions must be satisfied by an employee in relation to work space in the home expenses. In this regard, the work space (i) must be the place where the employee principally performs the duties of the office or employment, or (ii) must be used exclusively during the period to which the expenses relate to earn income from the office or employment and, on a regular and continuous basis, for meeting customers or other persons in the ordinary course of performing the duties of the office or employment. The concern is whether the employer, in considering whether an employee is required to provide work space in his or her home in respect of Form T2200, needs to consider the requirements in (i) and (ii) above.

Our Comments

The Department's general position on the eligibility of employees to claim expenses in respect of work space in the home is set out in Interpretation IT-352R2 "Employee's Expenses, Including Work Space in Home Expenses" which has been enclosed for your convenience.

It is our general view that where an employee voluntarily establishes an office in his or her home in circumstances where the employer provides the employee with an office to perform his or her day-to-day employment duties, the employee is not considered to be required to maintain an office in the employee's home. It would follow that Form T2200 should not be certified in that regard.

In the case of your second concern, there are a number of requirements that must be satisfied before an employee is entitled to deduct certain expenses in connection with work space in the home. One such requirement is that the employee be required by the contract of employment to provide such work space. 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 work space be provided by the employee.

You have asked us for our general comments on when it can be tacitly understood between an employer and an employee that the employee provide work space in his or her home. In relation to these comments, we would first mention that as indicated in paragraph 5 of IT-352R, work space in the home expenses include a proportion of rent if the home is rented (paragraph 8(1)(i) of the Income Tax Act), and supplies such as the cost of fuel, electricity, light bulbs, cleaning materials, and minor repairs (paragraph 8(1)(ii) of the Act). In order to claim such expenses, one of the conditions, as indicated above, is that the employee be required by the contract of employment to supply and pay for such expenses. Accordingly, it is in the context of this requirement that a "tacit understanding" must exist. In considering whether there is such an understanding between an employee and an employer, it is unfortunately not possible to provide any specific mechanism with respect to such a determination in view of the wide number of different types of circumstances that may exist. In any given case, where the employer provides an employee with a business telephone and a fax machine for use at the employee's residence and the employer does not provide the employee with office space elsewhere, it seems to us that these factors would be considerations. However, it is our view that they do not establish that the employee was required to maintain an office in his or her home. If you have an actual situation with which you are concerned, you may wish to submit the relevant information to your local Tax Services office.

With respect to your third concern, certification on Form T2200 by the employer is required by virtue of subsection 8(10) of the Income Tax Act with respect to a number of provisions of the Income Tax Act including subparagraphs 8(1)(ii) and (iii) of the Act. Although subsection 8(13) of the Act contains further restrictive conditions concerning work space in the home expenses, subsection 8(10) of the Act, in our view, does not require these conditions to be considered in assessing the employer's obligations in providing the certification.

We trust our comments will be of assistance to you.

Yours truly,

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