McCullough – Tax Court of Canada finds that an 8-hour commute between Ontario and Massachusetts was in the course of employment

The taxpayer, an industrial engineer successfully running the operations of his Canadian employer (“Savage Canada”), was asked by it to temporarily assist a US affiliate in its struggling operations over what proved to be a 19-month period. This entailed him travelling to the affiliate’s office in Westfield, Massachusetts (an eight-hour drive away) to serve for two to three weeks every month as its Senior Director of Manufacturing. He was required under an addendum to his employment contract to bear his related lodging, food and other travel expenses. When not working in Massachusetts, he continued his regular duties with Savage Canada, in Lakefield, Ontario. The employment contract for taking on these additional duties (for which he received additional salary) was signed only with Savage Canada, and Savage Canada paid the entirety of his remuneration.

In light of the last point, MacPhee J found that the taxpayer “only had one employer, and that employer was Savage Canada” so that it followed that the taxpayer satisfied the requirement under s. 8(1)(h) that he was ordinarily required (during the 19-month stint) to carry on his duties of employment away from his employer’s place of business (in Lakefield, Ontario).

That then left the issue (which neither party had really addressed) as to whether his claimed expenses were expended by the taxpayer “for travelling in the course of the … employment.” MacPhee J indicated that one “line of cases accepts that travel from an employee’s home to various work sites is in the performance of a service for an employer," whereas the other “finds that travel from an employee’s home to a work site is inherently personal, unless it can be shown that some duties are being performed by the employee during these travels (such as transporting supplies for an employer).” MacPhee J resolved this issue in the taxpayer’s favour, so that the travel expenses were deductible under s. 8(1)(h):

I will accept that the Appellant was providing a service to his employer in his eight-hour drive, and thus travelling in the course of his employment. The Appellant’s employment contract required him to travel to Savage USA. Thus in his travels, the Appellant was fulfilling an employment obligation.

Neal Armstrong. Summary of McCullough v. The King, 2022 TCC 118 under s. 8(1)(h).