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.
August 12, 1985
HEAD OFFICE Non-Corporate Rulings Division
D.Y. Dalphy (613) 993-7295
RE: Salesman's Expenses
This is in reply to your memorandum of June 20, 1985 requesting a clarification of paragraph 8(l)(f) of the Income Tax Act (the "Act").
The wages of an assistant engaged by a salesman who is an employee may be deductible either under subparagraph 8(1)(f) or under subparagraph 8(1)(i)(ii) of the Act. In other words, the fact that a salesman may not meet the requirements for the application of subparagraph 8(1)(i)(ii) of the Act ("... salary to an assistant ... the payment of which ... was required by the contract of employment") does not limit an employee - salesman from claiming as an expense the payment of salary to an assistant under paragraph 8(1)(f) of the Act ("under the contract of employment was required to pay his own expenses") if he otherwise qualifies under that paragraph and the amount paid is reasonable.
An employee may satisfy the words "under the contract of employment was required to pay his own expenses" used in subparagraph 8(l)(f)(i) of the Act where he has: 1) a written contract of employment specifying that he must pay his own expenses; or 2) an oral contract, an implied term of which is that he is required to pay his own expenses, and the requirement to pay his own expenses is normal in his employment situation. In summary, and with reference to subparagraph 8(1)(f)(i) of the Act only, the contract does not have to specifically require that an assistant be retained.
Finally, we would add that whether or not it was reasonable to employ an assistant and whether or not an employment contract exists are questions of fact.
We hope that this will clarify the situation.
for Director Non-Corporate Rulings Division 8(1)(f)
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