4 September 1998 External T.I. 9808355 - NORTHERN RESIDENTS DEDUCTION- 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: If a trip begins and ends in one year and reimbursement is in the following year, can a travel deduction be claimed under section 110.7?

Position: No

Reasons: Wording used in 110.7 and information sheet to the T2222

XXXXXXXXXX                                      980835
C. Tremblay
September 4, 1998

Dear Sir;

Re: Northern Residents Deduction- Travel Expenses

This is in reply to your facsimile letter of March 30, 1998, concerning the Northern Residents Deductions Information Sheet (the “Information Sheet”) attached to the T2222. Page 2 of the Information Sheet indicates that if you take a trip that begins and ends in one year and you are reimbursed the following year, you cannot claim travel deduction for that trip. You seek our clarification.

We confirm that the information sheet reflect the words of section 110.7 of the Act. Under section 110.7 of the Act, the individual must reside in the prescribed zone for at least 6 consecutive months, and file in the year in which he travelled a claim in prescribed form for the expenses the individual or another individual who was a member of the taxpayer’s household incurred. In that year, the individual will be allowed a deduction up to the amount received in the year by his employer in respect of that travel. Since in your example the travel will take place in one year with the reimbursement in the following year, no deduction will be available in the year the travel expenses are incurred, and a taxable benefit will result in the year the reimbursement is paid. This is explained more fully in paragraph 19 of IT-91R4, Employment at Special Work Sites or Remote Work Locations, dated June 17, 1996 (copy enclosed).

We trust our comments are of assistance,

Yours truly,

J. F. Oulton, CA
for Director
Business and Publications Division
Income Tax Rulings and
Interpretations Directorate
Policy & Legislation Branch