25 March 1999 External T.I. 9904995 - BUSINESS STOPS ON WAY HOME - PERSONAL?

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 the exception in paragraph 5 of IT-63R5 applies in the situation where an employee makes a business call on behalf of the employer during the course of travelling from his or her residence to the employer’s place of business, to which the employee regularly report, or vice versa.

Position:

Question of fact.

Reasons:

Generally, in cases where travel includes both a personal element and an employment element, we consider the primary purpose of a particular trip in determining whether it is personal in nature or employment-related. The primary purpose of any trip is always a question of fact. Since the circumstances are likely to differ from one case to the next, we have not established any specific criteria or guidelines in this regard.

XXXXXXXXXX 	J. Gibbons
		5-990499
Attention: XXXXXXXXXX 

March 25, 1999

Dear XXXXXXXXXX:

We are replying to your letter of February 5, 1999, in which you requested our views on what constitutes “personal use” for purposes of computing automobile benefits. In particular, you asked for clarification in situations where an employee makes a business call on behalf of the employer during the course of travelling from his or her residence to the employer’s place of business, to which the employee regularly report, or vice versa. Your enquiry relates to comments in paragraph 5 in Interpretation Bulletin IT-63R5, “Benefits, Including Standby Charge for an Automobile, from the Personal Use of a Motor Vehicle Supplied by an Employer - after 1992.”

Written confirmation of the tax implications inherent in particular transactions is given by this Directorate only where the transactions are proposed and are the subject matter of an advance ruling request submitted in the manner set out in Information Circular 70-6R3. The following comments are, therefore, of a general nature only.

As you know, our general position is that personal use includes travel between the employee’s place of work and home. However, paragraph 5 of IT-63R5 indicates that an exception to this general position occurs when, as required by the employer or with the employer’s permission, the employee proceeds directly from home to a point of call other than the employer's place of business to which the employee reports regularly or returns home from such a point. As an example, the interpretation bulletin describes that of an employee making repairs at a customer’s premises.

We understand that you have difficulty reconciling the exception in the bulletin to our view that, where an employee stops to perform a work-related function during the trip from home to work or vice versa, for example, stopping at a bank or a client’s place, whether at the employers’ request or with the employer’s permission, the trip is normally considered as personal. In your view, travel to a point of call should be considered employment-related in spite of the fact that the employee proceeds home or to work from such a point. Generally, in cases where travel includes both a personal element and an employment element, we consider the primary purpose of a particular trip in determining whether it is personal in nature or employment-related. The primary purpose of any trip is always a question of fact. Since the circumstances are likely to differ from one case to the next, we have not established any specific criteria or guidelines in this regard. As suggested in paragraph 5 of IT-63R5, employees and employers should keep records on the use of the employer’s motor vehicle in support of the particular position taken.

We trust that these comments will be of assistance.

Yours truly,

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

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