12 February 1998 External T.I. 9730335 - DEDUCTIBILITY OF MOTOR VEHICLE TRAVEL EXPENSES

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:

Can employees, that cannot reside in the community because of cultural constraints, deduct their travel expenses between their homes and their work location.

Position: No.

Reasons:

	Does not meet the provisions of 8(1)(h.1).  Such 	expenses are considered personal expenses.

                                           		5-973033
XXXXXXXXXX		          		                          A. St-Amour

Attention: XXXXXXXXXX

February 12, 1998

Dear XXXXXXXXXX:

Re: Motor vehicle travel expenses

This is in response to your letter of November 13, 1997, requesting our views with respect to traveling expenses incurred by teachers in traveling from their residence to the employer's place of business to perform their teaching duties. You pointed out that, due to cultural constraints involved, it is not feasible for the teachers to reside in the community. We apologize for the delay in responding to your letter.

As indicated in paragraph 31 of Interpretation Bulletin IT-522R (copy attached), an employee is entitled to deduct, under paragraph 8(1)(h.1) of the Act, amounts spent in the year for motor vehicle expenses, as long as the amounts are reasonable in the circumstances and the employee is ordinarily required to carry on the duties of the office or employment away from the employer's place of business or in different places and the employee is required, under the contract of employment, to pay travel expenses incurred in the performance of the duties of the office or employment. In addition, the employee must not have claimed any deduction for the year under paragraph 8(1)f) of the Act, and must not be in receipt of an allowance for motor vehicle expenses that was excluded from income by virtue of paragraph 6(1)(b).

Subsection 8(10) of the Act provides that expenses will only be deductible by an employee under paragraphs 8(1)(h.1) with respect to motor vehicle travel expenses where the employee files with the return a prescribed form (T2200) signed by the employer to the effect that the employee met the requirements of the relevant provision for the deductibility of such expenses. As stated in paragraph 5 of Interpretation Bulletin IT-63R5 (copy attached) and paragraph 49 of Interpretation Bulletin IT-522R, the Department considers that travel between an employee's home and regular work location is considered personal commuting, the costs of which are not considered a deductible traveling expense. The Act does not contain a provision to provide for a deduction for such personal expenses, even when the employees, as in the situation you describe, cannot reside in the community because of cultural constraints. In the circumstances, we are of the view that the employer could not sign the prescribed form T2200 certifying that the conditions set out in paragraph 8(1)(h.1) were met.

As indicated in paragraph 22 of Information Circular 70-6R3 dated December 30, 1996, the above comments do not constitute an advance income tax ruling and are not binding on the Department. We trust the above comments will be of assistance to you. If you have any other questions, do not hesitate to contact us.

Yours truly,

for Director
Financial Industries Division
Income Tax Rulings and
Interpretations Directorate