28 November 2001 External T.I. 2001-0094835 - EMPLOYEES-OFFICE EXPENSES

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 CCRA.

Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ADRC.

Principal Issues: 1. Whether travel between an employee's home office and another work location is personal in nature (i.e., whether the other work location is a regular place of work). 2. Whether an employee is entitled to deduct work space in the home expenses.

Position: 1. and 2. - General comments were provided.

Reasons: The information provided was very limited.

XXXXXXXXXX 2001-009483
M. Eisner, CA
November 28, 2001

Dear XXXXXXXXXX:

Re: Employees - Office Expenses and Travel

This is in reply to your letter received on July 25, 2001, concerning the above-noted subject.

In the circumstances of your situation, employees, who are involved in sales and/or service functions, carry out employment duties at various client locations; i.e., pulp and paper mills. The duties carried out while at a pulp and paper mill include sales visits, technical or commercial presentation, data collection, testing, and performing trials in respect of new products or processes. Pursuant to the employment agreement between XXXXXXXXXX and the employee, the employee is required to provide "home office" space and pay for related expenses. The employee is not provided with office space at XXXXXXXXXX or at a pulp and paper mill. The employment duties that are carried out at the home office include contacting prospects, scheduling and confirming meetings, data analysis, report writing, proposal preparation, letter writing, e-mails, conference calls, month-end report writing, and accessing technical information from company resources.

Depending on the projects, an employee may be dedicated to one or two mills for several months at a time. You have also indicated that an employee may spend as much as 60% of his time at a mill or as little as 2% of his time at a mill.

You have requested our views on whether the travel between the home of an employee and a mill is of a personal nature. In addition, you have requested our views on whether the employees are entitled to claim work space in the home expenses.

Our Comments

Written confirmation of the tax implications inherent in particular transactions are given by this Directorate only where the transactions are proposed and are the subject matter of an advance ruling request. On the other hand, the review of completed transactions, such as those described above, fall within the responsibility of your local Tax Services Office. While we are nevertheless prepared to provide some general comments, we note that there appears to be a variety of scenarios in the above situation and we have been provided with limited information in relation to issues which can only be resolved on a case-by-case basis upon a review of all the individual's circumstances.

With respect to whether certain travel is considered employment related or personal travel for income tax purposes, the employee's regular place of work is a determining factor since travel from one's home to one's regular place of work would be considered personal in nature. The regular place of work of an employee is usually the location at or from which the employee performs the duties of employment, and may be at the employee's home. However, there may be more than one regular work place from which an employee performs employment duties and an employee's work place may change from time to time. In our view, travel between an employee's home and a regular place of work place is generally personal in nature, notwithstanding that the home may itself also be a regular place of work. In determining whether a particular location is a regular place of work, the regularity of the reporting and the nature of the duties carried on at this location are significant factors.

With respect to your second concern, we have enclosed a copy of Interpretation Bulletin IT-352R2 "Employee's Expenses, Including Work Space in Home Expenses" in which work space in the home expenses are discussed, as well as the related reporting requirements. As indicated in paragraph 2 of IT-352R2, subsection 8(13) of the Income Tax Act prohibits an employee from deducting work space in the home expenses unless the work space is either

(a) the place where the individual principally (more than 50% of the time) performs the office or employment duties, or

(b) used exclusively during the period to which the expenses relate to earn income from the office or employment and, on a regular and continuous basis, for meeting customers or other persons in the ordinary course of performing the office or employment duties.

We have not been provided with sufficient information in order to establish whether the requirement in (a) or (b) above has been met, and whether the other relevant requirements discussed in the interpretation bulletin have been met.

We hope the above comments will be of assistance. Should you require further assistance on the issues, you may contact your local Tax Services Office.

Yours truly,

Milled Azzi, CA
for Director
Business and Partnerships Division
Income Tax Rulings
Policy and Legislation Branch

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