14 May 2001 External T.I. 2001-0077745 - TRAVEL EXPENSES - PLACE OF BUSINESS

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:

Should the company issue a T2200 when their employees travel from their residence to a job site?

Position: Travel expenses incurred in connection with travel from home to a job site and back home from a job site at the end of the day would not qualify for the deduction under paragraph 8(1)(h.1). Travel expenses incurred in connection with travel between job sites during the course of a workday would qualify for the deduction.

Reasons:

IT-522R and previous opinions

XXXXXXXXXX .	2001-007774
		Cornelis Rystenbil, CGA
May 14, 2001

Dear XXXXXXXXXX:

Re: Travel Expenses - Place of Business

This is in reply to your letter of March 26, 2001 in which you requested direction regarding the issuance of Form 2200 to your construction employees, in respect of travel expenses. More specifically, you wanted to know, for purposes of completing the form, what the Canada Customs and Revenue Agency (CCRA) considers to be your place of business. We understand that the employees do not receive any allowance or reimbursement for the travel expenses.

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 70-6R4. 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 that 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 travel expenses (other than motor vehicle expenses) under paragraph 8(1)(h) of the Act or motor vehicle travel expenses under paragraph 8(1)(h.1) of the Act. Upon signing the form, the employer certifies that certain of the required conditions set out in paragraphs 8(1)(h) and 8(1)(h.1) of the Act are met. Where the required conditions are not met, it would follow that the employer should not complete Form T2200.

In order to be entitled to a deduction for travel expenses under paragraph 8(1)(h) or 8(1)(h.1) of the Act, all the conditions set out in the relevant paragraph must be met, including the two following requirements:

(i) the employee was ordinarily required to carry on the duties of the office or employment away from the employer's place of business or in different places; and

(ii) the travel expenses (in the case of paragraph 8(1)(h) of the Act) or the motor vehicle expenses (in the case of paragraph 8(1)(h.1) of the Act) were incurred for travelling in the course of the office or employment.

With respect to the first condition, the CCRA, as stated in paragraph 32(c) of the enclosed Interpretation Bulletin IT-522R, generally considers that the "place of business" of an employer refers to a permanent establishment of the employer such as a field office at a large construction site. Moreover, where the terms of employment with respect to the employee are conditional upon the employer's ability to obtain successive contracts such that the employee may or may not be kept on the payroll when a particular contract is completed the CCRA considers that the place of business of an employer includes each place where the employer is carrying out a contract or contracts.

With respect to the second condition, the CCRA, in accordance with the comments in paragraph 49 of IT-522R, considers that an employee (employed on a more-or-less permanent basis) who spends most of his time working at places where the employer is carrying out contracts (each such place being the employer's place of business) would not be travelling in the performance of the duties of the office or employment when the employee is travelling from his or her residence to the employer's place of business. As indicated in paragraph 14 of the bulletin, expenses for travel between home and work are personal in nature and are therefore not deductible. However, travel between job sites during the course of the workday by an employee in order to carry out a contract or contracts would be travelling in the performance of the duties of the office or employment.

Although the signing of the Form 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 Form 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 example, 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 and metropolitan area where the employer's establishment to which the employee regularly reported for work 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.

We trust that these comments will be of assistance.

Yours truly,

Milled Azzi, CA
for Director
Business and Partnerships Division
Income Tax Rulings Directorate

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