17 April 1998 External T.I. 9808435 - ISSUING T2200 FOR CONSTRUCTION WORKERS

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 construction company can issue form T2200 to its employees who travel over 40 kms to the company's job sites.

Position:

General comments.

Reasons:

If the conditions of subparagraphs 8(1)(h) or (h.1) are not met the employer should not issue form T2200

		980843
XXXXXXXXXX 		Roxane Brazeau-LeBlond, CA

Attention: XXXXXXXXXX

April 17, 1998

Dear Sir:

Re: Issuance of Form T2200 for Construction Workers

This is in response to your letter of March 11, 1998 in which you requested direction regarding the issuance of Form T2200 to your unionized construction workers. We understand that the employees are employed through union locals to work on specific projects. Workers report daily to the various project sites and do not report to your offices. They travel an excess of 40 kilometres from their homes to the work sites and receive a daily travel allowance from the XXXXXXXXXX local which you believe is non-taxable.

Our Comments

Written confirmation of the tax implications inherent in particular transactions are given by this Directorate only where the transactions are proposed and are the subject matter of an advance ruling request. The procedures for requesting an advance income tax ruling are outlined in Information Circular 70-6R3 dated December 30, 1996. Where the particular transactions are completed, the enquiry should be addressed to the relevant Tax Services Office. However, we are prepared to provide the following comments which are of a general nature.

Form T2200 is the prescribed form which must, pursuant to subsection 8(10) of the Income Tax Act (the "Act"), be signed by an employer in order for an employee to claim deductions for travelling expenses (other than motor vehicle expenses) under paragraph 8(1)(h) of the Act or motor vehicle travelling expenses under paragraph 8(1)(h.1) of the Act. With this form, the employer certifies that certain of the required conditions of paragraphs 8(1)(h) or (h.1) of the Act are met.

Under paragraphs 8(1)(h) and (h.1) of the Act, reasonable amounts that an employee spends in the year for travelling in the course of an office or employment may only be deducted from the employee's income from an office or employment if 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; if the employee is required, under the contract of employment, to pay travel and motor vehicle expenses incurred in the performance of the duties of the office or employment; and if the employee is not in receipt of an allowance for travel expenses that is excluded from income by virtue of subparagraphs 6(1)(b)(v), (vi) or (vii) of the Act, or of an allowance for motor vehicle expenses that is excluded from income by virtue of paragraph 6(1)(b) of the Act. Also, the employee must not have claimed any deduction for the year under paragraphs 8(1)(e), (f) or (g) of the Act (railway employee expenses, sales expenses or transport employee expenses, respectively) for an amount to be deductible under paragraph 8(1)(h) of the Act or have claimed a deduction for the year under paragraph 8(1)(f) of the Act for an amount to be deductible under paragraph 8(1)(h.1) of the Act.

With regards to the requirement in subparagraphs 8(1)(h)(i) and 8(1)(h.1)(i) of the Act that employees are ordinarily required to carry on the duties of the office or employment away from the employer's place of business or in different places, "place of business" generally is considered to have reference to a permanent establishment of the employer such as an office, factory, warehouse, branch or store, or to a field office at a large construction job, and "in different places" generally refers to the situation where the employer does not have a single or fixed place of business.

The condition in subparagraphs 8(1)(h)(ii) and 8(1)(h.1)(ii) of the Act that 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, ordinarily necessitates that there be an express requirement within the terms of a written contract of employment. However, 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 employee will pay the travel expenses. This will be a question of fact and can only be determined through a review of the circumstances present in each case.

We do not have sufficient information to determine whether the allowance your employees receive is non-taxable by reason of paragraph 6(1)(b) of the Act or subparagraphs 6(1)(b)(v), (vi) or (vii) of the Act. However, if this were to be the case, or if any of the other required conditions for subsections 8(1)(h) or 8(1)(h.1) of the Act are not met for a particular employee, it follows that you should not complete the Form T2200 in respect of the employee.

Although the signing of the T2200 by the employer is a prerequisite in order for an employee to be able to claim a deduction for certain employment expenses, a signed T2200 does not provide an employee with any assurance that any expenses incurred are deductible since the Act contains other criteria that the employee must satisfy. For instance, subsection 8(4) of the Act may prevent the deduction of expenses for meals under paragraph 8(1)(h) of the Act.

For meal expenses to be deductible under paragraph 8(1)(h) of the Act, subsection 8(4) of the Act requires that the meal be consumed during a period while the employee was required by the duties of employment to be away, for a period of at least twelve hours, from the municipality where the employer's establishment to which the employee regularly reported for work was located and away from the metropolitan area where it was located. Employees who are hired at a series of places at which the employer is carrying out a contract or contracts cannot meet this requirement as each such place is considered to be the establishment to which the employee is required to report for work during the time worked there.

As for the deduction for motor vehicle expenses under paragraph 8(1)(h.1), when workers report directly to the job sites the motor vehicle expenses the employees incur to get from their homes to a particular job site would not be deductible under paragraph 8(1)(h.1) of the Act because, as explained in paragraph 14 of the enclosed Interpretation Bulletin IT-522R, Vehicle, Travel and Sales Expenses of Employees, these expenses would be considered to be personal in nature and, as such, would not be considered to be "for travelling in the course of an office or employment."

We trust that these comments will be of assistance.

Yours truly,

Roberta Albert, CA
for Director
Business and Publications Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch

??

- 2 -

.../cont'd

- 1 -