28 September 1998 External T.I. 9816945 - EMPLOYMENT EXPENSES AND THE INTERNET

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: Are internet fees deductible for an emplyee based on a % of time used for work ?

Position: No, such fees are considered personal in the same way as the basic rate for a telephone is.

Reasons Section 8 does not authorize a deduction and the Employment Guide at page 8 states that the basic rate for a telephone is not deductible. Capital items such as a computer or fax is also not deductible.

XXXXXXXXXX 981694
C. Tremblay
September 28, 1998

Dear Sir;

Re: Employment Expenses

This is in reply to your facsimile letter of June 26, 1998, wherein you asked our opinion on whether internet fees can be deducted as employment expenses based on a percentage used for work.

Our Comments:

Subsection 8(2) of the Income Tax Act (the “Act”) limits an employee’s deduction to amounts specifically permitted under section 8 of the Act. Subparagraph 8(1)(i)(iii) of the Act will allow a deduction for supplies consumed directly in the performance of the duties of office or employment, where an employee is required by a contract of employment to supply and pay for cost of supplies that were consumed directly in the performance of the duties, to the extent that the employee has not been reimbursed and is not entitled to be reimbursed. Generally, supplies are for items directly used for work and include such items as pens, pencils, paper clips, stationery, stamps, street maps, directories and long-distance telephone calls, provided they were paid to earn employment income. However, the monthly basic rate for the telephone, the cost to purchase a computer, fax or other such equipment are not deductible.

We are of the opinion that the internet fees are not deductible under section 8 of the Act, since there is no provision thereunder which would permit a deduction for such fees.

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

- 2 -