17 September 1999 External T.I. 9922535 - EXPENDITURE (TRAILER) EMPLOYEE

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: (1) Can an employee, who is a tree planter and works "in different places" for the purposes of paragraph 8(1)(h) of the Act and is entitled to deduct travel expenses under that provision, deduct the cost of a trailer in which the employee would live while working for the reforestation company. (2) In the alternative, can the employee claim capital cost allowance in respect of the trailer?

Position: (1) No (2) Capital cost allowance in respect of the trailer cannot be claimed

Reasons: (1) The cost of a capital asset is not considered to be deductible under paragraph 8(1)(h) of the Act (subparagraph 8(1)(h)(ii) of the Act refers to travel expenses). (2) There is no provision in section which would allow the employee to claim capital cost allowance and subsection 8(2) of the Act restricts an employee to those expenses described in section 8 of the Act.

XXXXXXXXXX 992253
M. Eisner
Attention: xxxxxxxxxx

September 17, 1999

Dear XXXXXXXXXX:

Re: Employment Expenses

This is in reply to your letter of August 13, 1999, concerning the above-noted subject

In the situation provided, an individual is employed as a tree planter for a reforestation company and is required to pay his own expenses which include lodging. The individual is employed by the reforestation company from May to October at various work locations. The individual currently works for about 3 weeks at each location and uses a tent with respect to the various work sites. The individual maintains a home for his family.

The individual is considering the purchase of a trailer in which he would live while working for the reforestation company.

You have asked us whether the individual could deduct the cost of the trailer in computing his or her employment income

Our Comments

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 income tax ruling request. The procedures for requesting an advance income tax ruling are outlined in Information Circular 70-6R3 dated December 30, 1996. However, we are providing you with the following general comments that are not binding on the Department.

By virtue of subsection 8(2) of the Income Tax Act (the "Act"), an individual is restricted to those expenses described in section 8 of the Act when computing income from an office or employment. Under paragraph 8(1)(h) of the Act, amounts spent in the year by an employee (other than a salesperson to whom paragraph 8(1)(f) of the Act is applicable) for travel expenses (other than automobile expenses) are deductible under paragraph 8(1)(h) of Act if, inter alia, the employee is ordinarily required to carry on the duties of the employment away from the employer's place of business or in different places. Where an employee is entitled to deduct travel expenses under paragraph 8(1)(h) of the Act, it is our view that the employee cannot claim the cost of a trailer as paragraph 8(1)(h) of the Act does not permit a deduction for the cost of a capital asset. Further, there is no provision in the Act that would permit an employee to deduct capital cost allowance in respect of the trailer. If you would like further information, you may find the Department's Guide on Employment Expenses useful. It can be examined at http://www.rc.gc.ca.

We regret that we could not give you a favourable reply. Yours truly,

John Oulton
for Director
Business and Publications Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch