Section 8

Table of Contents

Subsection 8(1) - Deductions allowed

Paragraph 8(1)(a)

Cases

The Queen v. Patterson, 82 DTC 6326, [1982] CTC 371 (FCTD)

The deduction of traveling expenses pursuant to s. 8(1)(h) did not preclude a deduction pursuant to s. 8(1)(a).

Paragraph 8(1)(b) - Legal expenses of employee

Commentary

An individual is denied all deductions in computing his or her income from an office or employment, except as provided by section 8: s. 8(2).

S. 8(1)(b) permits an employee to deduct, in computing his or her income from an office or employment, amounts paid as or on account of legal expenses incurred by the taxpayer to collect or establish a right to salary or wages owed to the taxpayer by the employer or former employer of the taxpayer.

A proposed amendment would amend s. 8(1)(b) effective for amounts paid after 2000 to refer instead to such amounts paid in order to collect or establish a right to collect an amount that, if received, would be included in the individual's employment income. The technical notes of the Department of Finance stated:

Concern has been expressed that where an amount is not owed to the employee directly by the employer, any legal expenses incurred by the taxpayer would not be deductible under paragraph 8(1)(b), even though the amount, when received, would be taxable as employment income. This would be the case, for example, with respect to legal fees incurred by a taxpayer to collect insurance benefits under a sickness or accident insurance policy provided through an employer.

(The Farrell decision is an example of a situation where the pre-amendment wording potentially was problematic.)

Given that the amount, to be deductible, must have been incurred in order to collect or establish an entitlement to employment remuneration, amounts will not be deductible if they were incurred to challenge the award of employment to someone else (Turner-Lienaux), or in defending an action in a dispute that did not arise out of the terms of the employment (even if the individual's entitlement may be an ancillary element to the action) (Fenwick). Accordingly, legal expenses incurred in defending against serious charges which if substantiated might result in loss of employment generally will not be deductible (Wilson, Kaushik, Blagdon , see also Simolai). Legal fees incurred in order to challenge a termination of employment or to seek a larger damages payment for termination of employment generally be considered to have been incurred in order to establish an entitlement to a retiring allowance rather than to employee remuneration and, therefore, will be non-deductible under s. 8(1)(b)(Bonsma, Blagdon, MacDonald) (although they may be deductible under s. 60(o.1)).

It has been stated that s. s. 8(1)(b) covers not only enforcing an existing right to salary owing but also bringing into existence a right to salary which thereupon becomes owing to the taxpayer (Blackburn), so that legal expenses incurred by an employee who has been dismissed (or suspended) in order to secure a reinstatement of his employment generally will be deductible (Fernando). Similarly, litigation expenses incurred with a view to establishing that the employee is entitled to a higher salary generally will be deductible, regardless of the action's outcome (Loo).

Cases

Fenwick v. Canada, 2009 DTC 5525, 2008 FCA 370

Legal expenses incurred by the taxpayer in defending against a derivative action that was based on his allegedly having caused the corporation to have paid him excessive remuneration, were not deductible. Sharlow, J.A. stated (at para. 8):

Paragraph 8(1)(b) is not intended to permit legal expenses to be deducted when they are incurred in litigation involving a claim for damages involved in disputes other than those arising from the terms of employment, merely because the Defendant's entitlement to a particular remuneration is an element of the claim.

She also stated that "it is an open question whether paragraph 8(1)(b) also applies to legal expenses incurred by an individual who is being sued by an employer or former employer for reimbursement of an over-payment of salary or wages." (Para. 8.)

Loo v. Canada, 2004 DTC 6540, 2004 FCA 249

The taxpayer and other lawyers employed in British Columbia by the Department of Justice sued the Department in the British Columbia Supreme Court alleging that they were entitled to be paid at the same rate as lawyers employed by the Department in Toronto. As "Mr. Loo is trying to establish by litigation that, for the services he has rendered to his employer, the law requires that he be paid more than he has been paid", it followed that the taxpayer was trying to establish a right to salary "owed" to him by his employer.

Turner-Lienaux v. The Queen, 97 DTC 5294 (FCA)

Legal expenses that were laid out by the taxpayer to challenge the outcome of a public service competition in which another position with the same employer was awarded to a third party, were not deductible.

Fernando v. The Queen, 93 DTC 5412 (FCTD)

Legal expenses (but not interest thereon) paid by a dismissed member of the Alberta Union of Public Employees in connection with a grievance before an arbitration board resulting in his reinstatement were deductible. Rothstein, J. was satisfied that the basic amount ordered and paid in the case was wages and not a retiring allowance.

Wilson v. The Queen, 90 DTC 6382 (FCTD), aff'd 91 DTC 5407 (FCA)

Legal expenditures made by a salaried school teacher in defending charges of rape and unlawful confinement were not deductible.

See Also

Ross v. The Queen, 2016 TCC 170 (Informal Procedure)

expenses incurred to preserve pharmacist livelihood not deductible

The taxpayer had been a pharmacist since 1990 in Sydney, Nova Scotia. The Nova Scotia College of Pharmacists held a discipline hearing with respect to some complaints and reached a settlement agreement with the taxpayer which among other things required the taxpayer to take a university ethics course. The taxpayer deducted related fees for exams, travel, urine tests and legal counsel, on the basis that the expenses were legal expenses incurred as a result of the complaints under the Pharmacy Act, and were incurred to preserve the taxpayer’s ability to earn an income.

V.A. Miller J concluded (following Blagdon) that none of the amounts claimed were deductible pursuant to s. 8(1)(b), stating (at paras 10 and 12):

Paragraph 8(1)(b) has a narrow scope. It is intended to apply where an employee has incurred legal expenses in attempting to collect unpaid salary or wages, or in attempting to settle a dispute with an employer or former employer with respect to the amount of salary to which the employee is entitled: Fenwick...at paragraph 7. …

It is clear that the...$4,989.73 was not incurred by the Appellant to collect or establish a right to salary or wages. It was incurred to allow her to preserve a future right to work as a pharmacist.

Allan v. The Queen, 2013 DTC 1072 [at 390], 2013 TCC 65

The taxpayer and his brother ran an illegal escort business through two corporations. The taxpayer incurred $48,164 in legal fees while unsuccessfully defending against charges for living on the avails of prostitution, which he deducted as employment expenses. Pizzitelli J denied the deduction of those amounts, as the taxpayer could not establish that the fees were incurred to establish a right to salary or wages. He stated (at para. 28):

The Appellant's argument is more remote [than in Wilson]. He is in fact saying that it was essential to resolve the criminal matter in order to enable him to preserve his dignity and reputation to continue work.

Caruso v. The Queen, 2012 DTC 1200 [at 3511], 2012 TCC 233 (Informal Procedure)

Webb J. found that the taxpayer, a professional hockey player, could not deduct under s. 8(1)(b) the fees he paid to a sports agent corporation ("MFIVE SPORTS") to conduct salary negotiations. First, MFIVE SPORTS was not authorized to practise law and, second, it did not practise law. Furthermore, a salary negotiation cannot establish a right to a salary, as there is no such right until the negotiations conclude and a contract is formed.

Lester v. The Queen, 2012 DTC 1030 [at 2642], 2011 TCC 543 (Informal Procedure)

The taxpayer was an employee and majority shareholder of a corporation. Lamarre J. found that legal fees he incurred were not deductible from his employment income, because they were incurred in his capacity as a shareholder (seeking remedy against another shareholder for misuse of corporate funds) and not to collect or establish a right to salary or wages.

Chagnon v. The Queen, 2011 DTC 1205 [at 1216], 2011 TCC 268

The taxpayer, a former president of a corporation, sought to deduct legal fees arising from his successful defence to an action, in which the corporation's shareholders attempted to recover the value of stock options that the taxpayer had accepted while allegedly knowing about a planned takeover bid for the corporation.

After noting (at para. 17) the question as to whether the action against the taxpayer sought to reclaim compensation paid or was a broader claim relating to alleged wrongdoing (insider trading), Boyle J. found that taxpayer's legal fees were spent to establish a right to salary or wages, and therefore deductible under s. 8(1)(b): "the claim against him related to the very issuance of the options to him upon his appointment as president and CEO."

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 54 - Capital Property 124

Blackburn v. The Queen, 2010 DTC 1073 [at 2898], 2010 TCC 69 (Informal Procedure)

The taxpayer, a police officer, was dismissed following a criminal charge for dangerous driving. He was convicted. He argued that he could deduct the $14,420 in legal fees because, had the defence been successful, he would then be entitled to recover damages for wrongful dismissal. Therefore, the legal fees were incurred pursuant to s. 8(1)(b) to recover salary and wages. Woods J. disallowed the deduction because, under s. 248(1), "retiring allowance" includes wrongful dismissal damages and "salary and wages" excludes any retiring allowance.

Bonsma v. The Queen, 2010 DTC 1227 [at 3639], 2010 TCC 342 (Informal Procedure)

Legal fees incurred by the taxpayer in an action against his employer for termination of his employment were in respect of the establishing of an entitlement to retiring allowances rather than salaries or wages, and, accordingly, were non-deductible.

Kaushik v. The Queen, 2006 DTC 2277, 2005 TCC 207 (Informal Procedure)

Legal fees incurred by the taxpayer in defending both at the departmental level and at the level of the Dean of the Ontario Veterinary College a complaint of a very serious nature made against him by some of his graduate students were not deductible.

Cimolai v. The Queen, 2005 DTC 1800, 2005 TCC 767

Legal expenses incurred by the taxpayer, who was a doctor employed by a hospital, in an action against fellow doctors at the hospital in respect of alleged defamation did not qualify as being in respect of a claim to establish a right to salary from the hospital.

Farrell v. The Queen, 2005 DTC 842, 205 TCC 352

Legal fees incurred by the taxpayer in enforcing the payment to her of disability benefits by her former employer were deductible. The disability benefits received by her constituted "salary or wages", and it was appropriate to treat these amounts as being owing by her former employer notwithstanding they were paid by the insurer.

Blackburn v. The Queen, 2004 DTC 2409, 2004 TCC 180 (Informal Procedure)

Legal fees paid by the taxpayer in his unsuccessful defence against changes of dangerous driving, with his conviction at trial resulting in suspension without pay from his position of police officer, were not deductible. However, legal fees paid by him for a successful appeal which resulted in an order for a new trial and in a retroactive reinstatement of his pay for the period of his suspension were deductible. S. 8(1)(b) covered not only enforcing an existing right to salary owing but also bringing into existence a right to salary which thereupon became owing to the taxpayer - and here such litigation resulted in the reinstatement of the taxpayer's salary.

Blagdon v. The Queen, 2003 DTC 804 (TCC), aff'd 2003 DTC 5491, 2003 FCA 269

fees incurred in allegations of incompetence not deductible

Legal expenses incurred by the taxpayer in a wrongful dismissal suit against his former employer were non-deductible given that the definition of "salary or wages" excluded retiring allowances. Legal expenses incurred by the taxpayer to defend himself at a Transport Canada inquiry into allegations of his incompetence as the master of a tanker also were not deductible given that such expenses could not realistically be said to be incurred to collect or establish a right to salary or wages owed to him by his employer or former employer.

L'Écuyer v. The Queen, 95 DTC 241 (TCC)

Legal expenses incurred by the taxpayer, who had been appointed for an indefinite term as a member of a municipal assessment tribunal, in seeking to reverse a government decision to make his appointment subject to a fixed term, were non-deductible.

MacDonald v. MNR, 90 DTC 1751 (TCC)

Legal expenses incurred in order to obtain an amount as damages for wrongful dismissal were not deductible because the amount received was a retiring allowance rather than salary or wages, notwithstanding that the retiring allowance was calculated by reference to salary which would have been earned during a reasonable notice period.

Administrative Policy

12 February 2013 Internal T.I. 2013-0475631I7 - Treatment of Settlement Amounts

It is contemplated that a lump sum would be paid to the individual plaintiffs in a class action suit in settlement of their allegation that monthly long-term disability benefits received by them should not have been reduced by monthly benefits under the Pension Act. Applying the surrogatum principle in Tsiaprailis, CRA found that this amount would be taxable and included in the recipient's employment income in the year received under s. 6(1)(f), and found that the legal fees paid in the year by a class action member could be deducted from the class member's employment income in that year under s. 8(1)(b).

19 November 2012 Internal T.I. 2012-0433201I7 - Legal fees incurred re: job reinstatement

Regarding a taxpayer's lawsuit for reinstatement of employment and associated retroactive pay, and to receive performance pay and other damages, CRA stated that the taxpayer's legal fees should be apportioned reasonably among the various objectives of the taxpayer's suit, and the deductibility of each portion should be considered based on its corresponding objective and on its success:

  • The portion relating to unpaid performance pay, which allegedly accrued during the taxpayer's employment, is deductible under s. 8(1)(b) regardless of the suit's outcome, in accordance with Loo.
  • The portions relating to reinstatement of employment and associated retroactive pay, banked leave, and lost promotional opportunities are not currently deductible (CRA stated that Turner-Lienaux establishes in general that a person is not "owed" salary or wages if he did not do the work or occupy the position that required the salary or wages to be paid). However, such portions may become deductible depending on the outcome:
    • If the taxpayer's suit is successful and the taxpayer is reinstated, then these portions relate to salary or wages owing and are deductible under s. 8(1)(b) (Fernando).
    • If the taxpayer's suit is successful in the main but the taxpayer is not reinstated, then these portions will fall under the s. 248(1) definition of "retiring allowance" and will be deductible under s. 60(o.1) to the extent of the amount received and included in income (e.g. not counting RPP and RRSP contributions).
    • If the taxpayer's suit is unsuccessful, then these portions cannot be said to be owing, and are not deductible.
  • The portion relating to pain and suffering awards, if any, are not deductible because damages for pain and suffering are non-taxable.
Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 60 - Paragraph 60(o.1) apportionment among objectives 272

24 March 1995 T.I. 942430 (C.T.O. "Legal Fees")

Fees paid to a party other than a firm of barristers and solicitors could qualify as legal expenses if they can be regarded as being for services pertaining to the domain of law.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 60 - Paragraph 60(o.1) 33

IT-99R4 "Legal and Accounting Fees" under "Collection of Salary and Wages"

Paragraph 8(1)(c) - Clergy residence

Commentary

Inclusion in clergy member's income where provision of manse or housing allowances

It is common for members of the clergy to receive a significant portion of their remuneration from their employing church in the form of a housing allowance in respect of the costs of accommodation that is owned by them (or their spouses) or that is rented by them. Such allowances are included in their income under s. 6(1)(b). Similarly, being allowed to occupy the church manse free of charge will give rise to a benefit that is included under s. 6(1)(a) in their income from employment.

Computation of deduction

In the circumstances described below, s. 8(1)(c) provides a deduction in computing the income from employment of the clergy person in respect of the accommodation occupied by him or her.

Under s. 8(1)(c)(iii), where a residence or other living accommodation occupied by the taxpayer is supplied "in the course of, or because of" the employment (e.g., a manse that a church agrees at the time of hiring to make available for occupation by the minister and family), the amount of the deduction is equal to the value of the benefit derived from the supply of the accommodation (including amounts in respect of utilities), to the extent that the value is already included in income under s. 6. (As indicated in Williams, the quoted phrase "implies a need for a strong causal relation between" the occupation of the residence and the employment of the minister, so that this test will not be satisfied where the house in question is not provided by the employer and is simply a house in which the taxpayer chooses to reside.)

Under s. 8(1)(c)(iv), where the taxpayer's principal place of residence or other principal living accommodations which is ordinarily occupied by the taxpayer in the year is owned or rented by the clergy person, the deduction is equal to the least of three amounts:

  • the employee's remuneration for the year from the office or employment;
  • the greater of: (a) 1/3 of the employee's total remuneration from the employment for the year; and (b) $1,000 per month (to a maximum of ten months) in the year during which the employee meets the conditions set out in subparagraphs 8(1)(c)(i) and (ii); and
  • the rent paid or the fair rental value of the residence including utilities (this amount must be reduced by the total of all other amounts deducted in computing the employee 's income from a business or from an office or employment in connection with the same accommodation). This could arise, for example, where two spouses who are members of the clergy occupy the same accommodation.

Eligibility for deduction

To be eligible for the deduction from their employment income, an employee must satisfy two requirements.

First, the employee must be a member of the clergy or of a religious order, or be a regular minister of a religious denomination (s. 8(1)(c)(i)).

Second, the employee must be in charge of, or ministering to, a diocese, parish or congregation, or be engaged exclusively in full-time administrative service by appointment of a religious order or a religious denomination (s. 8(1)(c)(ii)). (As described in the Lefebvre decision, the "functions" requirement in what now is s. 8(1)(c)(ii) was added in 1956.)

In addition, to claim the deduction, the employee must include with his or her return a certificate of the employer (on form T1223) certifying that the conditions for the deduction have been satisfied: s. 8(10).

Member of religious order

It has been suggested that the following characteristics would be indicative of a religious order: its purpose should be primarily religious; its members must agree to adhere to a strict regime of dedication to its goals to the detriment of their own material well-being; the members' commitment should be full-time and of a long-term nature; the spiritual and moral discipline under which they live must be markedly stricter than that to which lay members are expected to adhere; admission to it must be in accordance with strict standards; and there should generally be a sense of communality (McGorman - see also Kirkbride). Organizations whose purposes are primarily educational are not religious orders (Zylstra Estate, Oligny) nor, apparently, is an organization whose principal purpose is assistance to needy persons or personal development through the conduct of sports or outdoor activities (Oligny cf. Alemu).

It has been found that an organization whose members earn comfortable incomes, devote a significant part of their time to raising funds for their own support and are free to earn income from other sources, is not a religious order (Koop). However, a trans-denominatinal Christian organization that operated group homes for developmentally challenged adults and children was found to be a religious order notwithstanding that is used a structured pay scale for employees rather than paying them only enough to satisfy their basic needs (Alemu).

Member of clergy

Bowman TCJ stated that although ordination was not required in order to qualify as a member of the clergy, what was required was "a formal act of recognition whereby that person is set apart from the other members of the church as a spiritual leader" together with "a formal, serious and long-term commitment to the Ministry" (Kraft). In Tidd, V.A. Miller stated that a spiritual leader "is one who... is aimed at changing people" and "who not only prays with those in need but offers them spiritual guidance." Reference also has been made for a requirement that there be some formal recognition (akin to ordination) (Kirkbride).

Regular minister

In Hardy v. The Queen, 98 UDTC 24, [1997] TCJ 1191, Rip J. noted (at para. 21) that in Saltmarsh v. Adair, [1942] SC(JC) 58, the justices:

...appear to infer that a "regular minister" is one who performs spiritual duties, the conduct of religious services, the administration of sacraments and the like;

ii is appointed by a body or person with the legitimate authority to appoint or ordain ministers on behalf of the denomination; and

iii is in a position or appointment of some permanence.

In the Lefebvre case, the Court approved the presence of a requirement that, in order to qualify as a regular minister, the individual's appointment must be of a permanent character. Accordingly, "the fact that a person hold a position or performs duties in a relatively permanent manner will not suffice if the person does not also have a legitimate appointment." As under canon law, Roman Catholic pastoral agents (unlike ordained ministers) were not considered to have a permanent status, they did not qualify as regular ministers.

A regular minister has been found to include an individual who regularly ministers to the spiritual need of a congregation (or parish or diocese) in a substantial way (see Austin, where a credentialed but not ordained minister of a Pentecostal church was found to be a regular minister notwithstanding that he devoted most of his time to musical matters), and who is qualified to so minister to the congregation's spiritual needs (see Kirkbride).

A half-time staff-associate can qualify as a "regular" minister (Kolot).

Ministering to congregation

As it is accepted, for example, that a chaplain at a correctional institute can qualify (see Shaw), the meaning of congregation appear to be broad. In the course of finding that a group of students were not a congregation to whom a professor of religious knowledge ministered, Bowman TCJ referred to a congregation as an "assemblage or gathering of persons to whom a minister provides spiritual counselling, advice, illumination and inspiration" (Fitch). In McNeil, Rowe TCJ referred to "a gathering for a shared religious purpose recognized by the Church," although the taxapyer in that case (a priest who also worked as a psychologist at a health clinic) was entitled to the deduction in respect of his part-time position as a chaplain to the RCMP (see also Kraft). The faculty and staff at the Ontario Bible College were not a congregation because they were encouraged to rely or in fact relied upon their own denominational church congregations for their primary spiritual life (Zylstra Estate).

Consistently with s. 33(2) of the Interpretation Act (references to the singular include the plural), ministering to multiple congregations can satisfy the test in s. 8(1)(c)((ii)(B) of ministering to a congregation (Kraft).

In McGorman, Bowman TCJ stated that "'to minister' means merely 'to serve', or 'to attend to the needs of'" and that the when Jesus traveled throughout the Holy Land dealing with people from all backgrounds and places it could not "reasonably be said that He was not ministering to a congregation." An individual can qualify as a member of the clergy who is ministering to a congregation even though he or she does not preach sermons (Tidd).

Full-time administrator appointed by religious order or denominaton

Appointment by an ecumenical or multi-denominational organization likely will not qualify as appointment by a religious denomination (Reimer). As "full-time" is used in contra-distinction to part-time, carrying out some pastoral duties will not necessarily disqualify an administrator as being full-time (McGorman). An individual who performs administrative services for an organization which does not qualify as a religious denomination nonetheless may qualify for the deduction if that organization was controlled by a religious denomination, so that it can be said that he or she was appointed by a religious denomination (Fitch), or where the controlling religious denomination in fact appointed him or her (Reimer).

Principal Place of Residence v. Principal Residence

The deduction under s. 8(1)(c)(iii) refers to "the residence or other living accommodation occupied by the taxpayer;" and the deduction under s. 8(1)(c)(iv) refers to "the taxpayer's principal place of residence (or other principal living accommodation), ordinarily occupied during the year by the taxpayer." CRA has stated that "principal place of residence" under s. 8(1)(c)(iv) differs from "principal residence" in that, while the taxpayer can designate his or her principal residence, the taxpayer's "principal place of residence" is always a question of fact. Whether the taxpayer "ordinarily occupies" a principal place of residence is analogous to whether the taxpayer is "ordinarily resident" in that place (4 June 2013 Memorandum 2012-0455961I7). (See s. 2(1) for the meaning of "ordinarily resident.")

Remuneration limitation

S. 8(1)(c) contemplates that an employed clergy person or administrator described in s. 8(1)(c)(i) and (ii) is accorded a deduction from his or her income from employment. It follows that an individual who is not employed, for example, a retired clergy person, will not be entitled to the deduction. Similarly, where a parson earns income that does not qualify as income from an office or employment, e.g., contributions received directly from members of the congregation, such income will not entitle him or her to a deduction under s. 8(1)(c) (Rumford).

Payments received by a chaplain from her employer's wage replacement plan during an extended sick leave were found to be "remuneration" so that she continued to be eligible for the deduction (Shaw).

Cases

Canada v. Lefebvre, 2010 DTC 5042 [at 6691], 2009 FCA 307

The taxpayers, who were Roman Catholic pastoral agents, did not qualify for the clergy residence deduction in 8(1)(c). In 1956, the provision (which originally had no function requirement) had been expanded so that the deduction would now be limited to persons who fulfilled the functions now described in s. 8(1)(c)(ii). As it was therefore status and not functions that are described in s. 8(1)(c)(i), an individual who performs duties in a relatively permanent fashion will not qualify as having the status of a regular minister if his or her appointment is not of a permanent nature. "In canon law, the distinction between ordained ministers and lay faithful (among whom pastoral agents are recruited) remains as fundamental today as it has always been;" and "only ordained ministers are conferred a status that can be said to be permanent." (Paras. 39-40.)

Canada (Minister of Citizenship and Immigration) v. Khan, 2005 DTC 5715, 2005 FC 398

The Tax Court Judge had not erred in finding that the taxpayer, who was engaged in full-time administrative service, had been appointed to his position by the Christian and Missionary Alliance of Canada (a religious denomination) and not by the Evangelical Fellowship of Canada or the World Evangelical Fellowship, which were not.

Rumford v. The Queen, 94 DTC 6121 (FCA)

The taxpayer was not an employee of the Erindale Bible Chapel but instead held a position there as a "commended worker." His compensation consisted of a fixed stipend of $3,660 each quarter plus the total voluntary contributions made by members of the congregation through envelopes on which his name was written.

Because the definition of "office" was restricted to a position entitling an individual to a "fixed or ascertainable stipend or remuneration", the taxpayer's deduction under s. 8(1)(c) was restricted to the fixed portion of his remuneration.

Zylstra Estate and Small v. The Queen, 94 DTC 6687 (FCTD), aff'd sub-nominee McRae v. The Queen, 97 DTC 5124 (FCA)

The taxpayers, who were, respectively, the President of the Institute for Christian Studies ("ICS"), the Director of Alumni of Ontario Bible College and Ontario Theological Seminary ("OBC"), the President of OBC and the Director of Educational Services of the ICS, were not entitled to the deduction. Neither OBC nor ICS was a religious order given that there was "no expression of faith or of religious purpose of either institution apart from the educational purpose of each, that would mark the institution, and its members as distinct from the churches or denominations that each served" (p. 6693), and given that their primary purpose was educational. In addition, in the case of the taxpayers who had positions at OBC and who alleged that they were members of the clergy who ministered to a congregation, OBC could not be considered to constitute a congregation "since on the evidence the institution was seen as representative of, and serving several denominations through its educational programs" and "moreover, faculty, staff and students, and clearly alumni, were encouraged or had relied upon their own denominational church congregations for their primary spiritual life" (pp. 6696-7).

See Also

Parker v. The Queen, 2015 DTC 1118 [at 745], 2015 TCC 86 (Informal Procedure)

CPP payments not remuneration from office or employment; neither were payments from a long-term disability plan paid by the employee himself

The taxpayer's husband was a clergyman, who collected payments under the Canada Pension Plan and a long-term disability plan. He also claimed the clergy residence deduction, with the result that his taxable income was $1,239. The taxpayer claimed a spousal amount and a federal disability amount transferred from her husband. The Minister reassessed the taxpayer on the basis that her husband was not entitled to the clergy residence deduction.

Paris J dismissed the taxpayer's appeal. The CPP and LDP amounts were not remuneration from the husband's employer. CPP amounts are paid under a statutory scheme rather than an employment relationship (para. 26), and the LDP premiums were paid by the husband himself (para. 27). Neither of these came within the broad interpretation of remuneration in Shaw.

Words and Phrases
remuneration

Tidd v. The Queen, 2012 DTC 1060 [at 2785], 2012 TCC 16 (Informal Procedure)

The taxpayer was a member of the Toronto International Celebration Church ("TICC"), an evangelical church of over 2000 members with no formal hierarchy. In finding that the taxpayer was a member of the clergy, V.A. Miller J. referred to the "spiritual leader" requirement in Kraft, and stated (at paras. 22-24):

I take it that a spiritual leader is one who is aimed not so much at directing people or organizing people but is aimed at changing people. It is someone who not only prays with those in need but offers them spiritual guidance.

It was [the head pastor's] evidence that the Appellant "did everything that he did except give sermons on Sundays." ...

The Appellant oversaw the leaders in the TICC. I find that she was a spiritual leader in the TICC and she was recognized as such by the congregation and the senior pastor of TICC.

The taxpayer also "ministered" to the congregation.

Shaw v. The Queen, 2010 DTC 1144 [at 3267], 2010 TCC 210 (Informal Procedure)

The taxpayer, a chaplain at a correctional centre, received payment under her employer's wage replacement plan during her extended sick leave. Woods J. found that these payments were "remuneration for the year from the office or employment" for the purpose of determining the maximum clergy residence deduction in s. 8(1)(c). She stated (at para. 14):

The narrow focus of paragraph 8(1)(c) is the clergy. The apparent object of the provision is to provide this group with tax assistance related to housing. It seems unlikely that Parliament would wish to provide such assistance to clergy who are healthy, and yet deny the assistance to clergy who are ill.

Kirkbride v. The Queen, 2003 DTC 966, 2003 TCC 229 (Informal Procedure)

The taxpayer was a facilities manager at a Pentecostal church who, in addition to his regular functions, was allowed to perform some duties normally performed by a minister such as performing baptisms, serving communion or praying and counselling when called upon.

The deduction was not available to him given that he was not a member of the clergy (there was no evidence that showed any formal recognition (akin to ordination) had taken place), he was not a regular minister (he was selected due to his occupational background and competence rather than any spiritual criteria other than his supporting the general principles and beliefs of the church), and he was not a member of a religious order (there being no evidence of self-sacrifice and dedication to the goals of the organization to the detriment of it own material well-being, or that his spiritual and moral discipline and regime was markedly stricter than that to which lay members of the church were expected to adhere).

Koop v. The Queen, 99 DTC 707 (TCC)

In finding that The Navigators were not a religious order, Bowman TCJ. noted (at p. 709) that "unlike the members of the other organizations [e.g., Youth For Christ, Christian Horizons], the members of The Navigators earned comfortable incomes, can set their own level of targeted income, devote a significant part of their time to raising funds for their own support, and are free to earn income from other sources".

Austin v. The Queen, 99 DTC 710 (TCC)

The taxpayer, who was a credentialed, but not ordained, minister of a large Pentecostal church in Winnipeg who devoted most of his time to musical matters, was found to be a "regular minister". Bowman TCJ. noted that as 50% of every service in the Pentecostal church is devoted to music, in the Pentecostal church a person who provided the musical aspects of the service was indeed ministering to the congregation's spiritual needs in a significant way as was a minister who preached the sermons.

Alemu v. The Queen, 99 DTC 714 (TCC)

Christian Horizons, which operated 115 group homes throughout Ontario attending to the needs of 850 developmentally challenged adults and children and which described itself as a "trans-denominational evangelical ministry serving people with exceptional needs", was found to be a religious order notwithstanding that it used a structured pay scale for employees rather than paying them only enough to satisfy their basic needs.

Fitch v. The Queen, 99 DTC 721 (TCC)

There was a sufficient degree of control by the Seventh-Day Adventist Church in Canada of the Canadian Union College, and by the Western Christian College Society of the Western Christian College for the president of each such college to qualify as being appointed by a religious denomination.

However, a professor of religious knowledge at the Canadian Union College did not qualify for the deduction as it could not be said that his students represented a congregation. Bowman TCJ. stated (at p. 727):

"Nor do I think that a group of students can be said to be a congregation in the sense of an assemblage or gathering of persons to whom a minister provides spiritual counselling, advice, illumination and inspiration."

Words and Phrases
congregation

McGorman v. The Queen, 99 DTC 699 (TCC)

In finding that the Canadian Baptist Overseas Mission Board and the Society of International Ministries were religious orders, Bowman TCJ. suggested the following characteristics would be indicative of a religious order: its purpose should be primarily religious; its members must agree to adhere to a strict regime of dedication to its goals to the detriment of their own material well-being; the members' commitment should be full-time and of a long-term nature; the spiritual and moral discipline under which they live must be markedly stricter than that to which lay members are expected to adhere; admission to it must be in accordance with strict standards; and there should generally be a sense of communality.

Bowman TCJ. went on to find that one taxpayer was 'ministering' to a 'congregation' by performing a wide range of services to the Somali community in Toronto (stating at p. 705 that "'to minister' means merely 'to serve', or 'to attend to the needs of'" and that the when Jesus travelled throughout the Holy Land dealing with people from all backgrounds and places it could not "reasonably be said that He was not ministering to a congregation." A second taxpayer was found to be engaged in full-time work in administering on behalf of CBOMB, a major social program in Bolivia, notwithstanding that she engaged as well in pastoral work (noting at p. 706 that "'full-time' is used in contra distinction to 'part-time'".

Locations of other summaries Wordcount
Tax Topics - Statutory Interpretation - Ordinary Meaning 96

Kraft v. The Queen, 99 DTC 693 (TCC)

In finding that two Commended Workers of the Plymouth Brethren were "clergy", Bowman TCJ. stated that membership of the clergy "requires a formal act of recognition whereby that person is set apart from the other members of the church as a spiritual leader" and "requires a formal, serious and long-term commitment to the Ministry". He declined to follow the finding in Small v. MNR, 89 DTC 663 that to be a member of the clergy an individual must go through a ritual called "ordination" by the particular denomination.

Another taxpayer was found to be eligible for the deduction notwithstanding that he served multiple congregations, and yet another taxpayer was eligible for the deduction notwithstanding that he ministered to a custodial facility for young offenders who thus, in a sense, represented a captive audience who were not denominationally homogenous.

Words and Phrases
clergy

Oligny v. The Queen, 96 DTC 1744 (TCC)

In finding that the Christian Service Brigade of Canada was not a religious order, Dussault TCJ. noted that members were not required to adhere to compelling and specific rules and went on to state (at p. 1753):

"When the principal purpose of an organization is education, assistance to needy persons or personal development through the conduct of sports, recreational or outdoor activities, as in the instant case, it cannot be characterized as a religious order, even if the religious or spiritual aspect of the activities is present and may be of fairly great importance."

McNeil v. The Queen, 95 DTC 702 (TCC)

A priest, who served as a chaplain to the RCMP, and who practised as psychologist at the Community Health Services Association (the "Clinic") in Regina (a co-operative venture funded by the provincial Ministry of Health) was able to take an s. 8(1)(c) deduction in respect of his employment income from the former, but not the latter. With respect to the application of the requirement that he be ministering to a "congregation" with respect to his work at the Clinic, Rowe TCJ. stated (at p. 708) that

"... when administering a sacrament at the Clinic, in the course of his employment as a counsellor with special qualifications as a psychologist, he was not ministering to any person or persons who had assembled there within the context of being part of a congregation. A person may have been a member of a parish within the Diocese of Regina but was not attending at the Clinic in the course of a gathering for a shared religious purpose recognized by the Church."

Kolot v. MNR, 92 DTC 2391 (TCC)

A half-time staff associate at the Wesley United Church of Regina who was responsible for conducting Christian eduction including Sunday school, youth programs and attendances upon Sunday school teachers and who also assisted in worship was found to be a "regular minister".

Administrative Policy

23 January 2014 External T.I. 2012-0467711E5 - Clergy Residence Deduction

flunked 4 of 6 religious order criteria

An organization did not appear to qualify as a religious order as there was no indication of financial self-sacrifice or more rigorous working conditions than for non-religious organizations, that all members had made long-term work commitments and had committed to live markedly stricter lifestyles, and of strict screening criteria.

5 November 2013 Internal T.I. 2013-0494611I7 - Religious order

CRA reiterated its position in IT-141R that the characteristics indicative of a religious order are that:

  1. The purpose of the organization should be primarily religious.
  2. The members must agree to adhere to and in fact adhere to a strict moral and spiritual regime of self-sacrifice and dedication to the goals of the organization to the detriment of their own material well-being.
  3. The commitment of the members should be full-time and of a long-term nature. In some cases it may be for life, but this is not essential. It is important that it not be short term, temporary or part-time.
  4. The spiritual and moral discipline and regime under which the members live must be markedly stricter than that to which the lay church members are expected to adhere.
  5. Admission to the order must be in accordance with strict standards of spiritual and personal suitability.
  6. There should generally be a sense of communality.

CRA provided more detailed commentary on the second, fourth, fifth and sixth characteristics, but noted that the sixth has minimal weight.

4 June 2013 Internal T.I. 2012-0455961I7 - Clergy Residence Deduction

In principle, two clergy members who are spouses could claim the s. 8(1)(c) deduction in respect of two different properties, provided that each could establish that the property in question were his or her own principal place of residence.

CRA noted that "principal place of residence" differs from "principal residence." Unlike the principal residence designation, a taxpayer's "principal place of residence" is always a question of fact, which CRA maintains means "the place where the employee maintains a self-contained domestic establishment." CRA stated:

In our view, the place where the individual normally sleeps is a significant factor in making this determination. Other significant factors include the location of the individual's belongings, where the individual receives his or her mail, and where the individual's immediate family, including the individual's spouse or common-law partner and children, reside."

Whether the individual "ordinarily occupies" a principal place of residence is equivalent to whether the individual "ordinarily resides" at the principal place of residence.

28 April 2004 External T.I. 2004-006767 -

An employee of a particular religious organization, whose duties as a minister are reduced, would meet the function test provided ministering is still an integral part of that job.

9 August, 1995 T.I. 951067 (C.T.O. "Clergyman's Residence Deduction")

The Pastoral Associate/Co-ordinator of Religious Education at a Roman Catholic church who was engaged exclusively in full-time administrative service by appointment, did not qualify for the deduction because the individual was not a member of the clergy.

9 August, 1995 T.I. 951067 (C.T.O. "Clergyman's Residence Deduction")

The pastoral Associate/Co-Ordinator of religious education at a Roman Catholic Church would not qualify as a member of the clergy.

28 July 1995 Memorandum 951399 (C.T.O. "For Admin of XXX")

Walsh v. Lord Advocate, [1956] 3 All E.R. 129 established that in order for there to be a "religious denomination" there must be a lay element which is being ministered to as well as a ministering or clerical element having special status. Accordingly, an Association being considerably RC did not qualify as a religious order or a religious denomination because the Association did not recognize a place in its organization for a lay element.

27 March 1992 T.I. and 15 April 1992 Memorandum (Tax Window, No. 18, p. 8, ¶1835)

Where both members of a couple are members of the clergy each performing duties which qualified them separately for the deduction, then where the couple pay rent, the rent should be allocated between them on some reasonable basis. Where the couple own their residence, they may deduct a fair rental value of the premises.

Paragraph 8(1)(f) - Sales expenses

Commentary

S. 8(1)(f) permits a commissioned salesperson to deduct amounts expended by him or her for the purpose of earning income from employment to the extent of the commission income or similar amounts received by him or her in the year in question, provided that various requirements are satisfied. These requirements are as follows:

  1. the taxpayer must be employed in the year in question in connection with the selling of property or the negotiating of contracts for the employer (preamble of s. 8(1)(f));
  2. the taxpayer must be obligated under the contract of employment to pay his or her own expenses (s. 8(1)(f)(i));
  3. the taxpayer must be ordinarily required to carry on the duties of employment away from the employer's place of business(s. 8(1)(f)(ii));
  4. the taxpayer must be remunerated in whole or in part by commissions or other similar amounts fixed by reference to the volume of the sales made or the contracts negotiated (s. 8(1)(f)(iii));
  5. the taxpayer must not be in receipt of an allowance for travel expenses in respect of the year in question which is not included in the taxpayer's income by virtue of s. 6(1)(b)(v); s. 6(1)(b)(v) excludes, from the allowances that are otherwise includible in employment income, reasonable allowances for travel expenses received by an employee from the employer in respect of a period when the employee was employed in connection with the selling of property or negotiating of contracts for the employer (s. 8(1)(f)(iv));
  6. the amounts expended by the taxpayer must not be capital expenditures (except as described in s. 8(1)(j) respecting capital cost allowances for motor vehicles that are used or aircraft that are required for use in the performance of duties of the office or employment, or certain related interest financing costs) (s. 8(1)(f)(v));
  7. the amounts expended are not described in s. 18(1)(l) (respecting expenses for the use or maintenance of a yacht, camp, lodge, or golf course or facility (subject to some exceptions) or membership fees or dues for most clubs) (s. 8(1)(f)(vi)); or
  8. the amounts expended qualified as deductions in computing the automobile standby inclusion under. 6(1)(e) (s. 8(1)(f)(vii)).

In addition, to claim the deduction, the employee must include with his or her return a certificate of the employer (on form T2200) certifying that the conditions for the deduction have been satisfied: s. 8(10). A further requirement for the deduction of meal expenses is that the meals were consumed during a period while the taxpayer was required under the duties of employment to be away, for a period of not less than 12 hours, from the municipality in which the employer's establishment to which the taxpayer ordinarily reported to work was located (and, where applicable, also from the the metropolitan area in which that establishment was located): s. 8(4).

Where there is no explicit requirement to this effect in the taxpayer's contract of employment, a court likely will be prepared to infer that there nonetheless was a requirement for the taxpayer to incur and pay the expenses in question (see 2 above), or to ordinarily carry out his or her duties of employment away from the employer's place of business where failure to do so would have had a prejudicial effect on his or her career or continued employment (Verrier, Gilling), or on his or her ability to generate future commissions (Frappier). However, the employee may not be able to satisfy this test (respecting, for example, car expenses) where the collective bargaining agreement establishing the terms of his employment expressly states that use of a car is not complulsory (Hudema).

The jurisprudential tests developed in connection with applying the general prohibition (in the absence of specific provisions to the contrary) in s. 18(1)(b) against the deduction of capital expenditures in the computation of income from a business or property also apply to the prohibition in s. 8(1)(f)(v) against the deduction of capital expenditures in the computation of income from an office or employment (see 6 above). Similarly to the jurisprudence on the acquisition by a corporation of customer lists (see Tomenson, Sunstrum, Cumberland Investments, Butler, Dominion Dairies and Southam Business Publications), the acquisition by a broker employed by an investment dealer of the customer lists of a departing employee was found to be a capital transaction. However, damages which broker employees were required to pay to their former employer upon moving to a competitor were not capital expenditures (Raphael, Douthwright).

Cases

Urquhart v. Canada, 2016 FCA 76

implied obligation to incur costs to earn enhanced commissions under oral contract

The taxpayer was employed under an oral contract by a Ford dealership in Miramichi, New Brunswick. In allowing the taxpayer’s appeal from the disallowance of expenses claimed under s. 8(1)(f), Rennie J.A. stated (at para. 6):

[R]egarding the contract objectively, it was an implicit or implied term that the employee would be required to incur certain costs in order to earn the commissions contemplated by the contract; see Sattva [2014 SCC 53, [2014] 2 S.C.R. 633] at para 49 [“in contractual interpretation, the goal of the exercise is to ascertain the objective intent of the parties — a fact-specific goal — through the application of legal principles of interpretation”].

Rennie J.A. further found that the Tax Court had erred in not distinguishing required expenses from discretionary expenses, stating (at para. 7):

He did not identify and segregate those expenses that were related to development and marketing of the appellant’s sales (which he was not required to incur under the contract) and those expenses which, when the employment contract was viewed objectively, were directly needed for the appellant to fulfill his responsibilities and obtain his entitlements under the contract (to sell cars and earn commissions) and were expressly agreed with the dealership (charge back).

The required expenses consisted of vehicle transfer costs to obtain the higher commission the dealership had agreed to pay the taxpayer if the cars were present in Miramichi, and the costs of purchasing accessories which he and the dealership had agreed to share. They excluded various promotional costs.

Gifford v. Canada, 2004 DTC 6120, 2004 SCC 15, [2004] 1 S.C.R. 411

The acquisition by the taxpayer, who was employed as a broker by an investment dealer, of the customer lists of a departing employee of the same firm, was found to be made on capital account for purposes of s. 8(1)(f)(v). The purchase "significantly expanded Mr. Gifford's client network, the structure within which he earned his employment income" and the payment was intended to secure a lasting advantage.

Hudema v. The Queen, 94 DTC 6287 (FCTD)

The taxpayer was not required to "pay his own expenses" as required by s. 8(1)(f) or "to pay the travelling expenses incurred by him" as required by s. 8(1)(h) given that the collective bargaining agreement specifically said that no employee was obliged to use his car, although it contemplated that he could be authorized to use his car. Furthermore, the receipt by him of a weekly car allowance of $44 per week plus reimbursement for actual gas, oil, lubrication and parking expenses was found to be a reasonable allowance given that the taxpayer "did not demonstrate that it was unreasonable for his employer to expect him to use his vehicle in an efficient way, with the allowance being expected only to pay for such incremental use of his car as his work required" (p. 6290).

The Queen v. Gilling, 90 DTC 6274 (FCTD)

implied obligation to incur travel expenses in order to perform marketing duties

Part of the responsibilities of the manager of a grain elevator pool was the sale on a commission basis of farm supplies, in connection with which the taxpayer attended on farmers, delivered farm supplies, and provided services on site. Given "that his failure to perform these duties would have had a prejudicial effect on his employment or on his career" (pp. 6276-7), the travel and other expenses incurred by him were deductible.

Verrier v. The Queen, 90 DTC 6202 (FCA)

implied obligation to incur expenses away from showroom
followed in McKee v. The Queen, 90 DTC 6205 (FCA)

The taxpayer, who was a highly successful automobile salesmen employed by a Winnipeg dealership, deducted in computing his commission income: expenses of gas and oil for his demonstrator (provided free of charge by his employer) and for two "courtesy" cars owned and provided by him to his customers for their own use when their cars were being serviced; parking charges incurred while conducting business; advertising carried out by him on his own to seek customers for himself; entertainment expenses incurred for the benefit of customers or prospective customers; and commissions or finders' fees paid by him to persons referring customers to him where the referral resulted in a sale. Mahoney J. held that these expenses were deductible:

"It would seem to me that a failure to sell enough cars would have resulted in the Appellant's discharge and if both employer and salesman recognize that enough cars can only be sold if the salesman conducts some of his work away from the showroom, then the salesman is ordinarily required to carry on the duties of his employment away from his employer's place of business."

In the trial division Strayer J. stated that the term "ordinarily" describes "activities which are normal, or of regular occurrence".

Words and Phrases
ordinarily

The Queen v. Malik, 89 DTC 5141 (FCTD)

Reed, J. rejected an argument that interest on a loan that was no longer being used by the taxpayer to earn income from property was deductible because as a life insurance salesman he was required to keep himself in good financial standing. "Amounts paid with respect to debts unconnected to the employment, to enable a person to remain solvent and thereby retain a licence which allows him or her to engage in a profession or calling, are not closely enough connected to the earning of the employment income to fall under paragraph 8(1)(f).

See Also

Griesbach v. Canada (M.N.R.), 91 DTC 142 (TCC)

commissions must be tied to sales volume; bonus based on gross profit was not commission
followed in Tulman v. The Queen, 2014 DTC 1144 [at 3427], 2014 TCC 140 (Informal Procedure)

The taxpayer's bonuses were not "commissions" for the purposes of s. 8. Christie J. stated (at para. 5):

To my mind the result is that in order for expenses to be deductible under that paragraph the remuneration pertaining thereto must be fixed by reference to the volume of the sales made or the contracts negotiated by the taxpayer claiming those deductions. Twenty per cent of the pre-tax gross profits of an employer with a number of employees is not synonymous with remuneration so fixed.

Words and Phrases
commission

Lavigne v. The Queen, 2014 DTC 1018 [at 2615], 2013 TCC 308 (Informal Procedure)

no requirement to pay own expenses

The taxpayer worked in sales, and sought to deduct approximately $44,000 in entertainment and meal expenses in respect of two years. Favreau J disallowed the deduction, as there was nothing in the employment contract indicating that the taxpayer was required to pay those expenses - in fact, the employer generally reimbursed such amounts, but apparently considered the $44,000 in question to be unreasonable.

Lequier v. The Queen, 2013 DTC 1012 [at 68], 2012 TCC 380

The taxpayer sold videos on commission and worked from an office in his home, and claimed deductions for home office expenses and for travel to and from his house for work. Paris J found that it was inconsistent for the Minister to allow the office deductions (i.e. to accept that there is a home office) and disallow the travel expense deductions (i.e. to reject that there is a home office), and therefore allowed the travel expenses.

The taxpayer's deduction of a travel allowance from his employer and loan payments on his car were disallowed pursuant to s. 8(1)(f)(v).

Czerczak v. The Queen, 2011 DTC 1005 [at 23], 2010 TCC 612 (Informal Procedure)

Lamarre J. denied the taxpayer's deduction of employment-related expenses. At para. 32: "[given that] the employer reimbursed all reasonable business expenses, there was no need to require the employee to incur other expenses for business purposes."

Cirone v. The Queen, 2010 DTC 1103 [at 3034], 2010 TCC 137

Paris J. at paras. 13-14:

While the task of proving expenses is made more difficult where a taxpayer has not kept any records or receipts, it is still open to him or her to provide oral evidence relating to those expenses. ...

In my view, some degree of precision regarding the type and amount of the expenditures claimed is required, along with the [taxpayer's] sales activities. The evidence provided by the [taxpayer] falls far short of this standard. In her testimony, she provided almost no information relating to the specific expenses that were claimed except for certain referral fees and gifts. For the most part, she simply asks the Court to accept her word that she made the expenditures and that she did so to earn income.

Locations of other summaries Wordcount
Tax Topics - General Concepts - Evidence oral evidence of accountign transactions 126

Raphael v The Queen, 2008 DTC 3559, 2008 TCC 202

Damages and legal fees that the taxpayer, who was a commission salesman at an investment dealer, became liable to pay to that investment dealer as a result of his leaving the investment dealer without notice to commence at a competitor, were not capital expenditures.

Douthwright v. The Queen, 2007 DTC 1614, 2007 TCC 560 (Informal Procedure)

Sums totalling $11,125 which the taxpayer was required to pay to his former employer (BMO Nesbitt) pursuant to settlement of an action brought against him by BMO Nesbitt based on a clause in his employment agreement that required him to reimburse BMO Nesbitt for $25,000 in training costs upon the taxpayer shifting employment to a competing investment dealer within specified periods of time, were deductible by him under s. 8(1)(f). Training costs incurred to maintain, update or upgrade an already existing skill or qualification (including trading on the BMO Nesbitt software, training in relation to the investment products available and training on portfolio and management techniques) were not capital in nature; and given that the Crown had not made any assumptions of fact as to what portion of the reimbursement amounts were on account of capital, and had not lead any evidence on such allocation, the Crown had failed to satisfy the onus of proof on it and the deduction of the amounts could not be denied on this basis.

Furthermore, in finding the settlement amounts (together with related legal fees) satisfied the test of being expended to earn commission income from the successor employer (TD Waterhouse), Webb J. stated (at para. 22):

"He could not have earned the commission income with TD Waterhouse unless he left the employment of BMO Nesbitt Burns and since leaving the employment of BMO Nesbitt Burns resulted in the obligation to reimburse BMO Nesbitt Burns for the training costs under the Agreement, these amounts paid under the Agreement were made for the purpose of earning the commission income that the Appellant earned from TD Waterhouse. The legal fees that were incurred were directly related to this expenditure and were incurred to presumably reduce the amount that the Appellant would have to pay under the Agreement and therefore were also made for the purpose of earning the commission income from TD Waterhouse."

Locations of other summaries Wordcount
Tax Topics - General Concepts - Onus 65

Ross v. The Queen, 2005 DTC 663, 2005 TCC 286

The taxpayer, who was a security salesman earning substantial commission income, was entitled to deduct substantial losses (in the range of $37,000 to $51,000 a year) incurred by him in his thoroughbred racehorse operation on the basis of his evidence that those activities were carried on for the purpose of developing client contacts; and the fact that he had a personal interest in these activities was not a basis for denying deduction.

Furman v. The Queen, 2003 DTC 723, 2003 TCC 298 (Informal Procedure)

A lawyer employed by a law firm was found not to be employed in connection with the selling of property or negotiating of contracts for his employer when he engaged in the wining and dining of potential clients or other promotional activities.

Frappier v. The Queen, 98 DTC 1521 (TCC)

The taxpayer, who was "a highly successful and aggressive business person whose principal stock-in-trade [was] her reputation, her expertise and her relationship with her clientele" (p. 1523) and who was employed by a brokerage firm, was able to deduct reimbursement payments she made to clients who lost money on securities bought by her on their behalf, notwithstanding that two of the clients were family members, some were neighbours and in two cases payments were made to persons who arguably lost money because of her husband.

No. 149 v. MNR, 54 DTC 142, 10 Tax ABC 147

The taxpayer, who was the vice-president of a corporation and was paid a fixed salary plus a percentage of the corporation's profits, was not entitled to the deduction in respect of expenses of his car, Christmas gifts and business entertainment. The word "commission" was not broad enough to embrace a share of the employer's profits.

Administrative Policy

18 February 2015 External T.I. 2012-0471731E5 F - Déductibilité du droit d’usage pour automobile

reduced auto enjoyment not an expenditure

The “Employer” provides a commissioned sales person (who satisfies the s. 8(1)(f) conditions) with an automobile, and includes in the computation of the employee's income a taxable benefit for the use of the automobile. However, the automobile is painted an unusual color and displays the logo of the Employer for promotional reasons.

May the taxable benefit to the employee, for the use of automobiles, be reduced to reflect the fact that the employer has a commercial advantage? If not, may the employee deduct an amount for advertising in the calculation of employment income? After finding that the taxable benefit to the employee could not be reduced, also responded negatively to the second question, stating:

[W]e emphasize the keyword "expended." …

[N]o amount was expended by the taxpayer for advertising. Thus,,, the taxpayer is not entitled to an amount allocated in computing its income.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 6 - Subsection 6(2) no reduction in benefit amount for benefits provided by employee to employer 212

11 April 2016 External T.I. 2015-0564161E5 F - IT-522R par. 36

non-taxable s. 6(1)(b)(v) allowance for one type of expense does not preclude s. 8(1)(f) deduction for other types

An employee (the "Seller"), who performed duties related to the selling of property for an employer, received a reasonable allowance, for example, an allowance based on the number of kilometres travelled, for travel expenses, that was not taxable under s. 6(1)(b)(v), and also spent additional amounts to fulfill duties of employment, for example, for meals, cell phone and promotional gifts. Does the receipt of the s. 6(1)(b)(v) allowance preclude the deduction under s. 8(1)(f) of the other expenses?

After quoting from IT-522R, paras. 34(a) and 36 as representing departures from the literal wording of s. 8(1)(f)(iv), CRA stated:

[A]ccording to this position, an allowance based on the number of kilometres travelled for motor vehicle expenses which is reasonable does not reduce the deduction claimed under paragraph 8(1)(f) by a Seller for reasonable meal expenses as they are two distinct types of expenses and the Seller has not received any non-taxable amount for meal expenses.

Thus, despite a Seller having received an allowance, which is not included in computing income under subparagraph 6(1)(b)(v), for a specific type of expense, it is possible to deduct other reasonable amounts expended to earn income from employment provided that all the other requirements of paragraph 8(1)(f) are satisfied.

23 April 1991 T.I. (Tax Window, No. 2, p. 22, ¶1210)

An incentive award based on the achievement of pre-determined sales targets, personal utilization rates and on qualitative management criteria set annually by the company for each employee, and not paid unless the company has achieved a pre-determined annual level of overall profitability, does not qualify as a commission or similar amount.

13 January 1989 Memorandum (June 1990 Access Letter, ¶1299)

RC accepts the Neville case as a precedent.

Articles

Beam, Laiken, "Employee Deductions", 1991 Canadian Tax Journal, p. 338.

Paragraph 8(1)(g) - Transport employee’s expenses

Commentary

S. 8(1)(g) permits employees of a person whose principal business is the transport of passengers and/or goods to deduct qualifying expenditures to the extent that the employee is not reimbursed (and is not entitled to be reimbursed) for the expenditures.

Two requirements are stipulated:

  1. the taxpayer's duties of employment required the taxpayer to regularly travel away from the employer's establishment where the taxpayer reported for work and away from the metropolitan area (if any) where that establishment was located, on vehicles used by the employer to transport the goods or passengers (s. 8(1)(g)(i));
  2. those duties of employment also required the taxpayer to regularly make disbursements for meals and lodging while so away from that municipality and metropolitan area (s. 8(1)(g)(i)).

The phrase "meals and lodging" referred to in the 2nd test is to be read conjunctively, so that if the employee is only required to make disbursements for meals, the deduction under s. 8(1)(g) will not be available (Renko, Crawford). However, in Kasaboski, this restriction was interpreted as applying only where the employee returned to his home each day rather than being on the road for days or weeks on end - and it was found in any event that the "and lodging" requirement was satisfied if on most travel days the employee (who slept in the cab of the truck) only incurred meals expenses but on rare occasion incurred lodging expenses for which he or she was usually reimbursed by the employer. Elwood similarly notes that, although an employee must have both meal and lodging expenses to be eligible for a deduction, there is no requirement that the meals be connected to the lodging.

The question as to whether two municipalities are part of the same metropolitan area may be determined by the degree of integration with each other through infrastructure (such as roadways) and public services (Walls, Foster).

Cases

Renko v. Canada (Attorney General), 2003 DTC 5417, 2003 FCA 251

The phrase "meals and lodging" was to be read conjunctively, with the result that a deduction claimed in respect of meals alone was properly disallowed by the Minister.

Walls v. The Queen, 76 DTC 6309, [1976] CTC 501 (FCTD)

The establishment of the taxpayer's employer to which he reported to work was in Windsor. He was entitled to deduct unreimbursed meal expenses incurred by him while in Detroit. Detroit did not constitute part of the metropolitan area of Windsor as it was not integrated with the City of Windsor: "for example, there are no common infrastructures, municipal services such as streets, water, fire or police protection, and there is no political connection." (p. 6312) In addition, Detroit was so much larger than Windsor that it was nonsensical to refer to Detroit as part of the Windsor metropolitan area.

See Also

Elwood v. The Queen, 2012 DTC 1268 [at 3792], 2012 TCC 313 (Informal Procedure)

Campbell J. found that, although Crawford provides that an employee must have meal and lodging expenses in order to qualify for a s. 8(1)(g) deduction (i.e. the two requirements must be "read conjunctively"), there is no requirement that the meal and lodging expenses be connected to each other. This did not assist the taxpayer in the present case, however, because he was unable to prove that his claimed meal expenses were incurred away from his municipality.

Campbell J. also remarked that the distinction drawn in Information Circular IC73-21R9 between a "meal" prepared in a restaurant or other business and a "lunch" prepared by the employee is "simply incorrect" (para. 17). There is nothing in s. 8(1)(g) to suggest that lunches prepared at home are not "meals."

Kasaboski v. The Queen, 2005 DTC 846, 2005 TCC 356 (Informal Procedure)

The taxpayers were a husband and wife truck-driving team who were on the road generally for two weeks at a time during which they slept in a bunk in the tractor but paid for the use of shower facilities at truck stops, and paid for restaurant meals without keep a log. After noting (at para. 9) that the Act does not require that there be a claim for an amount expended on lodging before there can be a claim for meals expense for the same days (whereas on the facts of the case the taxpayers on rare occasions would pay for motel lodging), that it would produce a nonsensical result for the statute not to allow a deduction for a shower for a trucker who sleeps in the tractor while permitting a full deduction if the trucker chose to stop for a motel the night, and before noting that he was sure that the taxpayers would have been entitled to deduct larger amounts if they had gone to the trouble of keeping receipts and a log of their expenditures, Bowie J. allowed them a deduction (multiplied by 50% in light of s. 67.1(1)) of Cdn.$40 per day for meals for each day on the road in Canada, and U.S.$40 per day for each day for each on the road in the United States, together with allowing them a further deduction for the estimated cost of using showers.

Bowie J. also noted that the test of reasonable expenses was a test of "whether any reasonable trucker would have paid that amount", rather than a question of what "would be a reasonable amount for a trucker to pay for meals each day" (p. 850).

Crawford v. The Queen, 2002 DTC 1883 (TCC) (Informal Procedure), aff'd sub nom. Renko

The taxpayers, who purchased their meals while operating ferries, but who returned to their homes each evening, were not entitled to the deduction, because they were required to make disbursements only for meals, and not for "meals and lodging". Bowie T.C.J. stated (at para. 11):

"The words 'and' in its plain meaning is clearly conjunctive. In cases of ambiguity it has been interpreted otherwise, in order to achieve the object of the legislation ... . The deduction for meals is not intended to be available to workers who return to their homes each night as a matter of course."

Words and Phrases
and

Foster v. MNR, 83 DTC 620 (TCC)

In finding that the municipalities of Maple Ridge and Langley were part of the metropolitan area of Vancouver, Rip TCJ. noted that there were roadways integrating these communities with the City of Vancouver.

Words and Phrases
metropolitan area

Administrative Policy

27 July 1998 T.I. 980774

Langley and Abbotsford are part of the metropolitan Vancouver area, and Nisku is part of the metropolitan Edmonton area.

8 February 1994 Memorandum 940065 (C.T.O. "Employment Expenses")

General discussion.

Paragraph 8(1)(h) - Travel expenses

Commentary

S. 8(1)(h) provides for the deduction of amounts expended by a taxpayer for traveling in the course of the taxpayer's office or employment where

  1. the taxpayer is ordinarily required to carry on the duties of employment away from the employer's place of business or in different places (s. 8(1)(g)(i)); and
  2. the taxpayer is required under the contract of employment to pay for such expenses (s. 8(1)(h)(ii));
  3. the taxpayer is not in receipt of a travel allowance that (by virtue of s. 6(1)(b)(v), (vi) or (vii)) is not included in his or her income for the year in question (s. 8(1)(g)(iii)); and
  4. the taxpayer does not claim a deduction for the year under s. 6(1)(e), 6(1)(f) or 6(1)(g).

Qualifying motor vehicle expenses are deducted under the similarly worded provisions of s. 8(1)(h.1).

In addition, to claim the deduction, the employee must include with his or her return a certificate of the employer (on form T2200) certifying that the conditions for the deduction have been satisfied: s. 8(10).

A further requirement for the deduction of meal expenses is that the meals were consumed during a period while the taxpayer was required under the duties of employment to be away, for a period of not less than 12 hours, from the municipality in which the employer's establishment to which the taxpayer ordinarily reported to work was located (and, where applicable, also from the the metropolitan area in which that establishment was located): s. 8(4).

As the employee is only entitled to deduct expenses expended in the course of the taxpayer's employment, traveling expenses incurred in traveling between work and home (which generally are considered to be of a personal nature, provided that the home is not used as an office or other work site) do not qualify for deduction even if the "ordinarily away" requirement of s. 8(1)(h)(i) is satisfied (Diemert, Vickers, Blackburn, Gutscher - and the jurisprudence under s. 8(1)(h.1)). However, the general principle, that travel from home to work is a personal expense, is typically confined to cases where the taxpayer's destination is a regular place of business (see Velnot). Accordingly, in the Homsy case, travel expenses incurred by an auditor in traveling between home and various different audit sites were found not to be of a personal nature (see also Moore). Where the taxpayer commutes throughout the year to the same special work site of his employer, the "ordinarily...away" requirement will not be satisfied (Wright), unless the site is not a permanent establishment of the employer (see Martorelli). Where the employee regularly works at a home office, travel to the office of the employer in another city may qualify for deduction (Toutov).

An employee may be considered to be ordinarily required to carry on his or her duties away from the employer's place of business (which can include a school) where he or she annually attends professional development seminars is accordance with the employer's expectations (Imray), is expected to attend school board meetings at a different location (Patterson), is expected as an implied term of her employment contract to attend such matters as principals' meetings and extracurricular events (Moore), is required to attend a training course in another city (Tremblay) or in the course of his duties as a fire chief must spend time away from the fire station responding to emergency calls or conducting inspections (Gariépy). Reporting to work daily at a trailer of the employer is not considered to be inconsistent with the employer's place of business being elsewhere (Freake). However, the taxpayer will not satisfy the "ordinarily away" requirement if for each shift he or she reports to work at a different establishment of a different employer (Ménard).

In appropriate circumstances, the costs of maintaining a small apartment at a special work site apart from the taxpayer's home can qualify for deduction (Gariépy).

A requirement under the taxpayer's duties of employment to carry on those duties away from the employer's place of employment or in different places, or a requirement under the contract of employment to pay for the expenses incurred in the related travel generally will be inferred where failure to do so could impair job function to the point of termination (Mina), or where such failure would likely result in a bad performance evaluation which could affect the employee's future with the employer for years to come (Hoedel, see also Rozen).

Cases

Imray v. The Queen, 98 DTC 6580, 1998 CanLII 8609 (FC) (FCTD)

The taxpayer was required to attend an annual professional development seminar for teachers and had done so for 28 of the previous 29 years. In finding that the taxpayer's related traveling expenses were deductible, Campbell J. stated (at p. 6585) that he had "no hesitation in finding that teachers' convention attendance is 'normal', 'a matter of regular occurrence', 'commonly' and 'usually' occurs, and is a requirement which takes teachers 'from time to time away from the places which they usually work'."

Tremblay v. The Queen (1997), 223 N.R. 85, 1997 CanLII 5678 (FCA (FCA)

After the taxpayer, who lived in Val Bélair, was hired by the RCMP, he was immediately sent to Montreal to take an English course from September 1991 to May 1992. In affirming a finding that the taxpayer was entitled to deduct various living expenses incurred by him during this period, the Court stated that "even a literal interpretation of subparagraph 8(1)(h)(i) leads to the conclusion that the respondent was ordinarily carrying on the duties of his employment away from his employer's place of business while he was assigned to Montreal during the 1991 and 1992 taxation years".

The Queen v. Chrapko, 88 DTC 6487, [1988] 2 CTC 342 (FCA)

The taxpayer worked 75% of his time as an employee of the Ontario Jockey Club at two race tracks in Toronto, and 25% of his time at a race track in Fort Erie, and resided in Niagara Falls. Given that he ordianrily worked at his employers establishments in Toronto, he was entitled to deduct traveling expenses incurred while working at the Fort Erie race track, but not at the two Toronto race tracks.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 5 - Subsection 5(1) 57

The Queen v. Patterson, 82 DTC 6326, [1982] CTC 371 (FCTD)

Automobile expenses incurred by a school principal as a consequence of attending numerous School Board meetings, student sports events and student nature study trips were deductible.

The Queen v. Diemert, 76 DTC 6187, [1976] CTC 301 (FCTD)

A locomotive engineer who lived in Regina but for the most part was assigned to work for five or six days at a time in Assiniboia was unable to deduct his expenses (at 10¢ per mile) in driving to and from Assiniboia. Since the starting point of his work was found to be Assiniboia rather than Regina (notwithstanding that his assignment to Assiniboia was determined by the Regina establishment of his employer), his expenses were incurred in the course of traveling to his work rather than on his work, and the expenses accordingly were not incurred "in the course of his employment".

See Also

Brown v. The Queen, 2013 DTC 1035 [at 167], 2012 TCC 452 (Informal Procedure)

A taxpayer who resided in Calgary regularly piloted flights between Los Angeles and Hong Kong. C Miller J found that the taxpayer could not deduct the cost of travel between Calgary and LA, given that "the law is well settled that commuting expenses, the expense of getting to and from work, are not deductible" and that "regardless of the reason for the expense, to be deductible [paragraph 8(1)(h)] clearly requires that the expenses be incurred by the employee while performing his duties" (para. 6).

Vickers v. The Queen, 2011 DTC 1066 [at 354], 2011 TCC 2 (Informal Procedure)

When the taxpayer resigned from his employment as an investment advisor at RBC, he took a job at TD Waterhouse in Ottawa. Not wanting to move his family until the end of the school year, he traveled back and forth between cities. Hogan J. (at para. 21) cited Blackburn for the proposition that "if an individual who lives in one city takes a job in another city that is very far from his or her home, he or she cannot deduct the costs incurred by the choice not to move." Therefore, the taxpayer could only deduct moving expenses and not the transportation, meal and lodging expenses for time spent in Ottawa while his family was still in Toronto.

Freake v. The Queen, 2009 DTC 2071, 2009 TCC 568 (Informal Procedure)

The taxpayer, who maintained a family home in Newfoundland, spent 2006 working as a journeyman lineman on projects in Virginia and California.

In rejecting the Crown's submission that the taxpayer was not required to be away from the employer's place of business because that place of business was the site trailer that he reported to daily, Pizzitelli, J. noted that the trailer was progressively moved through a larger geographical area, and that the US employer maintained various offices in the US, none of which was located at any of the projects.

Blackburn c. La Reine, 2008 DTC 2937, 2007 TCC 284 (Informal Procedure)

Jorré J. at para. 42:

If an individual who lives in one city takes a job in another city that is very far from his or her home, he or she cannot deduct the costs incurred by the choice not to move. That includes not only transportation, but also food and lodging. However, the Act provides for the deduction of moving expenses.

Ménard c. La Reine, 2006 DTC 2515, 2004 TCC 516

The taxpayer was a longshoreman employed by the Maritime Employers' Association. Because each of the docks of the Port of Montreal at which he worked was operated independently by separate companies, each dock constituted a separate place of business or a "different place". However, the taxpayer was not ordinarily required to carry on his duties at different docks in the course of a shift and his contract of employment did not stipulate that he must pay his travel expenses. Accordingly, travel expenses incurred in driving between docks, or between his home and docks, were not deductible.

Gariépy c. La Reine, 2005 DTC 1744, 2005 TCC 318 (Informal Procedure)

The taxpayer was hired as a fire chief for the fire department for the City of Salaberry and was required for one week out of every three to be on call 24 hours a day within the city limits. Rather than move to Salaberry from the family home 30-40 kilometres away, the taxpayer rented a small apartment in the City for use during the weeks he was on 24-hour duty.

In finding that the rentals for this apartment were a deductible travel expense, Paris J. noted

  1. that the taxpayer ordinarily was required to carry on his duties of employment away from the fire station, e.g., responding to emergency calls, conducting inspections and taking part in fire prevention programs, and
  2. his "duties" (i.e., "all of the tasks, activities, or actions that an employer may require an employee to perform" (p. 1746)) required him to remain in the City one week out of every three, and in appropriate circumstances rent could be considered to be a travel expense, including here where he stayed in the City for the benefit of his employer and as required by it.
Words and Phrases
duties

Delancy v. The Queen, 2004 DTC 2907, 2004 TCC 465 (Informal Procedure)

The taxpayer, who was a U.S. resident, and was employed as a football player by the Toronto Argonauts and the Calgary stampeders, sought to deduct his hotel and other living expenses incurred while living in the same city as the football club for which he worked. These expenses were not deductible as they were not incurred away from his ordinary place of work.

Homsy v. The Queen, 2004 DTC 2390 (TCC)

The taxpayer, who worked as a provincial tax auditor, would travel directly from her home to the site of the business being audited by her rather than first going to the office, and under her collective agreement was entitled to an allowance based on the shorter of the distance from the office of her employer to the audit site and the distance from her home to the audit site.

The taxpayer was entitled to treat the expenses of travelling to an audit site that were not covered by this kilometre allowance (i.e., in situations where the audit site was further from her home than from the office of her employer) as being of a non-personal nature given that it would be inefficient for her to go to the office and then to the audit site, and no element of the distance covered when she went from her home directly to an audit site should be considered to be of a personal nature.

Administrative Policy

18 March 2014 External T.I. 2012-0438941E5 - Deduction of expenses against executor fees

executor not required to bear expenses

An executor of an estate is considered to earn fees from an office rather than in the course of a business. The executor incurs expenses, with the estate being wound-up before the expenses could be reimbursed. Such expenses were not deductible under s. 8(1)(h) or (h.1) given that the estate would generally be required to reimburse the executor for his costs so that it could not be said that he was required to bear those costs.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Office executor holding an office 32

12 February 1998 External T.I. 5-973033 -

Employees, who cannot reside in the community because of cultural constraints, will not be able to deduct their travel expenses between their homes and their work location, because such expenses are considered personal expenses.

9 February 1990 Memorandum (July 1990 Access Letter, ¶1313)

Tree planters who report to several job sites in the course of the year and who cannot be considered to regularly or ordinarily report to any one place of business of the employer, can clearly meet the "in different places" requirement.

11 January 1990 Memorandum (June 1990 Access Letter, ¶1249)

Explanation as to why neither s. 8(1)(g) or (h) permits the deduction of the cost of food used for a meal which an individual carries from home to the job.

9 August 1989 Directive ASG-89-30 (June 1990 Access Letter, ¶1288)

Guidelines respecting whether an employee is ordinarily required to carry on his employment duties away from the employer's place of business and whether under the contract of employment he is required to pay the expenses incurred.

9 January 1989 Memorandum (June 1990 Access Letter, ¶1294)

In light of the Chrapko decision, a determination will have to be made of each employee's attendance at a particular track in order to locate the one where he usually works.

Subparagraph 8(1)(h)(i)

Cases

The Queen v. Phyllis Moore, 90 DTC 6200 (FCA)

It was an implied term of a school principal's employment contract that she travel away from the school premises in connection with such matters as attending principals' meetings away from her school, attending evening meetings at her school and participating in extracurricular activities. If she had not done so, she likely would have received unfavourable performance appraisals. Accordingly, the bulk of such expenses were deductible. However, "travel between home and her school, even though outside regular hours of work, was not in fulfillment of the requirement to carry on her duties 'away from her employer's place of business or in a different place', and were not deductible. "

The Queen v. Wright, 81 DTC 5004, [1981] CTC 14 (FCTD)

The taxpayer, who was employed by a construction company with its head office in London, Ontario, commuted throughout the 1975 taxation year directly from his residence to a construction site in Aylmer. Since the Aylmer construction site was a place of business of his employer, and he worked there throughout the year, his appeal failed.

See Also

Toutov v. The Queen, 2006 DTC 2928, 2006 TCC 187 (Informal Procedure)

The taxpayer, who was employed as a programmer and was allowed to work from his home in Kingston, was required by his employer to travel, at his own expense, to Ottawa on occasion to meet and deal with clients of his employer. In finding that the travel expenses were deductible, Bowman C.J. found that in such circumstances the office of the taxpayer in his home was an extension of his employer's place of business.

Gutscher v. The Queen, 2006 DTC 2485, 2006 TCC 163 (Informal Procedure)

The cost to the taxpayer incurred in driving from Ottawa (where he was employed by the army) to Cobalt, Ontario to visit with his family were not deductible. Bowman C.J. noted that a long line of cases had established the costs of traveling from one's home to one's place of work are personal expenses.

Administrative Policy

12 April 2017 External T.I. 2016-0642571E5 - Employee travel - board and lodging

logging employees working at a remote logging site unable to deduct their room and board fees

Employees travel from home to a remote forest camp where they receive board and lodging for a charge. Their employeer transports them daily between the camp and the logging site. In finding that the fees charged to them were not deductible under s. 8(1)(h), CRA stated:

[T]he camp is a place of business for [the employer]. Therefore…the expenses were not incurred while travelling away from the employer’s place of business… .

Subparagraph 8(1)(h)(ii)

Cases

The Queen v. Mina and Jacobi, 88 DTC 6245, [1988] 1 CTC 380 (FCTD)

Educational consultants employed by the North York Board of Education were entitled to deduct automobile expenses incurred by them in connection with making frequent daily trips between five schools and their office location in light of evidence that although lack of a car would not immediately lead to termination, termination would follow if the employee's job function were impaired. The receipt of (inadequate) mileage allowances did not affect this conclusion.

In determining the deductible car expenses, the percentage of miles driven in employment was applied to operating costs (gas, oil, repairs and car washes) and a combined percentage, reflecting both mileage and time used or available for employment, was applied to ownership costs (CCA, interest, licences and insurance).

Hoedel v. The Queen, 86 DTC 6535, [1986] 2 CTC 419 (FCA)

The taxpayer, who was a member of the Canine Division of the Regina Police Department, was provided with a vehicle that was specially adapted for transporting his dog and a general allowance of $70 per month. Transportation of the dog on his off-duty hours was a condition for him to be a member of the Canine Division in the sense that non-compliance with that condition "would likely result in a bad performance evaluation which could affect a member's future in the police force for years to come. "The taxpayer accordingly was entitled to deduct expenses incurred in transporting the dog between home and the police station, as well as increased expenses on trips of a purely personal character.

The Queen v. Jeromel, 86 DTC 6370, [1986] 2 CTC 207 (FCTD)

It was held that the taxpayer, who was granted a one-year sabbatical from his duties as a teacher for the purpose of undertaking graduate studies, was not required to undertake the course of studies as part of his duties of employment, and received his salary for the year on account of his previous employment rather than in payment for the current performance of duties. Travelling expenses which he incurred in the course of pursuing his studies were non-deductible.

Rozen v. The Queen, 85 DTC 5611, [1986] CTC 50 (FCTD)

A staff accountant at Thorne Riddell was required as an implied term of his employment contract to use his automobile in the course of performing audits at client premises at various locations within the City of Vancouver, and accordingly was entitled to the deduction. "If an employee is obliged to travel to do his work and his employer is not prepared to pay the exact and total cost of transportation, then he must come within the requirements of subparagraph 8(1)(h)(ii)."

The Queen v. Cival, 83 DTC 5168, [1983] CTC 153 (FCA)

It is not sufficient that under a contract of employment the employer undertook to reimburse the employee on a mileage basis for expenses that he incurred in using his car in the performance of his duties. The employee also must be contractually bound to use his car in doing his job.

See Also

Stokes v. The Queen, 93 DTC 201 (TCC)

The taxpayer was able to establish that an automobile was the most practical and most reasonable way for him to perform his duties as a "checker" for the Montreal Urban Transit Authority, with the result that he was entitled to deduct his automobile expenses.

Administrative Policy

8 February 1994 T.I. 940065 (C.T.O. "Employment Expenses")

The fact that the employee is not required to use her own personal vehicle but chooses to do so, as an option under the employment contract, does not automatically mean that she is not required under the contract to pay the travelling expenses or motor vehicle expenses as envisioned by s. 8(1)(h)(ii) and s. 8(1)(h.1)(ii). Once she chooses to use her vehicle then by implication she is required to pay the motor vehicle expenses.

86 C.R. - Q.75

The decision in Cival emphasized that the employee must be contractually bound to provide the automobile.

Subparagraph 8(1)(h)(iii)

See Also

Fitzpatrick v. IRC; Smith v. Abbot, [1994] BTC 66 (HL)

Expenditures of journalists on the purchase of newspapers and periodicals which they read primarily at home did not qualify for a deduction from their income under s. 189 of the Income and Corporation Taxes Act 1970 which provided for the deduction of money wholly, exclusively and necessarily expended in the performance of their duties of employment. Lord Templeman found that their work began when they arrived at the office or went out on location to obtain information, and that their reading was not an activity carried out in the performance of their work, but an activity which was a necessary preliminary to or preparation for performing the work.

Administrative Policy

11 July 1995 T.I. 950823 (C.T.O. ) "Work Space Deductible as Supplies")

"Workspace expenses which are deductible as 'supplies' under subparagraph 8(1)(i)(iii) of the Act consist of a reasonable proportion of expenses paid for the maintenance of the workspace such as the cost of fuel, electricity, light bulbs, cleaning material and minor repairs."

6 June 1995 Memorandum 950298 (C.T.O. "Workspace in the Home")

A T2200 may be issued to an employee who is an auditor whose duties are performed for the most part at the taxpayer's place of business and at an office established in his home: s. 8(10) does not require that the limitations set out in s. 8(13) be considered.

22 July 1994 T.I. 941204 (C.T.O. "Employment and Teachers' Supplies") (See also 941752)

Regarding the deductibility of expenses incurred by teachers to purchase supplies for use in their classrooms, RC stated: "In order to determine if an expense incurred by an employee, which was not expressly required in the contract was actually an implied requirement, the Courts have reviewed whether or not the failure to meet the requirement could result in the cessation of employment, poor performance evaluation or other disciplinary action on the part of the employer."

18 July 89 T.I. (Dec. 89 Access Letter, ¶1042)

Where the employer provided an allowance for trips exceeding 15 kilometres which were non-taxable by virtue of s. 6(1)(b)(vii.1), the employee thereby was not permitted a deduction under s. 8(1)(h) for trips under 15 kilometres.

Articles

Wilson, "Employment Status Under the Income Tax Act", 1993 Conference Report, pp. 2:10-11: Discussion of meaning of "supplies".

Paragraph 8(1)(h.1) - Motor vehicle travel expenses

Commentary

S. 8(1)(h.1) is similar to s. 8(1)(h), except that the former deals only with motor vehicle expenses, which are excluded from the scope of potentially eligible expenses under s. 8(1)(h).

In order for the expenses in question to be deducible, they must be incurred while performing duties of employment (Hogg). Accordingly, travel that is simply getting oneself to the employer's place of work will not qualify for the deduction (O'Neil). However, the general principle, that travel from home to work is a personal expense, is typically confined to cases where the taxpayer's destination is a regular place of business (Velnot).

However, a special construction site of the employer generally will not be considered to be the place of business of the employer, so that costs of travel by the employee between his home and the construction site can potentially qualify for deduction (Martorelli).

Cases

Hogg v. Canada, 2002 DTC 7037, 2002 FCA 177

The taxpayer, who was a judge of the Ontario Provincial Court, Criminal Division, was not able to deduct the cost of travelling to and from his home to the Court House in his own car or of travelling in his car when presiding away from the Court House or when attending meetings in other locations. Nadon J.A. stated (at p. 7040):

"... a plain reading of both the French and English text of paragraph 8(1)(h.1) of the Act makes it clear that the words 'motor vehicle expenses incurred for travelling in the course of the office ...' necessarily require that these expenses be incurred by the taxpayer while performing the duties of his office."

See Also

Kreuz v. The Queen, 2012 DTC 1201 [at 3514], 2012 TCC 238 (Informal Procedure)

The taxpayer was a substitute teacher for two school boards, and would be called from time to time to work at the school boards' various locations. D'Auray J. found that the taxpayer was ineligible for deductions under s. 8(1)(h.1) because, inter alia, the taxpayer was not working away from the employers' places of business (his place of employment was the school where he was assigned to teach), and the school board refused to issue the required certificate under s. 8(10) (T2200).

The taxpayer argued that, in exceptional circumstances, a T2200 certificate should not be required - for example, where an employer wrongly refuses to issue the certificate (see Brochu, 2010 TCC 274). D'Auray J. did not address this argument directly, but appears to have addressed it indirectly when he noted that the taxpayer "[had] not established that [the school board] acted unreasonably or in bad faith in not providing him with a T2200 form" (para. 76).

Zembal v. The Queen, 2011 DTC 1119 [at 668], 2011 TCC 145 (Informal Procedure)

The taxpayer, a bulldozer operator, used his vehicle to transport and store tools which were essential for bulldozer maintenance. Sheridan J. found that the taxpayer's motor vehicle expenses for driving to and from his construction site and to various other of his employer's sites were deductible, given that, as a practical matter, carrying the tools around with him was a job requirement. However, he disallowed a portion of the deductions in respect of the expenses the taxpayer would have incurred in driving to and from the employer's place of business at the start and end of his workday, had he actually done so.

Veinot v. The Queen, 2010 DTC 1097 [at 3017], 2010 TCC 112 (Informal Procedure)

The taxpayer, who was employed as a forestry equipment operator, was required to travel to various remote logging sites with a forestry vehicle. His employer paid an allowance, but disallowed the first 50 kilometers of each trip on the basis that the taxpayer was assumed to head to the employer's office first (a personal expense), and from there to the logging site. Woods J. found at paras. 16-18 that no portion of the drive to the site was a personal expense. The general principle, that travel from home to work is a personal expense, is typically confined to cases where the taxpayer's destination is a regular place of business.

Woods J. found at paras. 20-22 that the allowance could not be excluded from income under s. 6(1)(b)(vii.1), because it was not a "reasonable allowance." The allowance was not calculated solely on the basis of kilometers but included other factors such as which equipment was being transported. Moreover, the allowance was not intended to reimburse all employment-related costs, but only to provide some assistance. However, because the allowance was not reasonable, s. 8(1)(h.1)(iii) did not apply and the taxpayer was entitled to deduct his motor vehicle travel expenses.

Martorelli v. The Queen, 2010 DTC 1156 [at 3313], 2010 TCC 216 (Informal Procedure)

The taxpayer worked throughout the year at a construction site 50 kilometers away from his home, for which his employer gave him a transportation allowance of $8,467. The Minister argued that the allowance was taxable income. Paragraph 8(1)(h.1) only applies to expenses for travel to places other than the employer's place of business. Because the taxpayer worked at the same site throughout the year, the Minister argued, the construction site was the employer's place of business.

Woods J. found that this allowance was not a taxable benefit. The employer's presence on the site was not in the nature of a permanent establishment, so it was not the employer's place of business (paras. 18-22). Paragraph 8(1)(h.1) also requires that the expenses be incurred in the course of the office or employment. Woods J. stated at para. 25: "The appellant worked at temporary construction sites, often away from the municipality in which he lived and that in which his employer was based. From a common sense point of view, and in the context of s. 8(1)(h.1), traveling to and from these sites is not a personal activity but is part of the duties of employment."

Gutscher v. The Queen, 2006 DTC 2485, 2006 TCC 163 (Informal Procedure)

The cost to the taxpayer incurred in driving from Ottawa (where he was employed by the army) to Cobalt, Ontario to visit with his family were not deductible,. Bowman C.J. noted that a long line of cases had established the costs of travelling from one's home to one's place of work are personal expenses.

O'Neil v. The Queen, 2000 DTC 2409 (TCC) (Informal Procedure)

The taxpayer, who was responsible for the safety and security of employees of the City of Ottawa at its numerous properties, was required to use his automobile in travelling from his regular office at City Hall to various City-owned sites, or on an emergency basis, directly to a site from his home. He received a per-kilometre allowance for travel between the office and such sites, but not for travel for him between his home and City Hall. In reassessing him, Revenue accepted the principle that he was entitled to deduct his automobile expenses for travel between his home and a work site that was not City Hall but denied the claim for automobile costs incurred for travel between his home and City Hall.

In affirming this reassessment, Rip T.C.J. noted (at p. 2414) that "the words '... incurred in the performance of ... employment' refer to automobile expenses incurred by the employee while providing services under the employment contract" and that a person could not be deemed to be "travelling in the course of the office or employment" unless the travel actually involved the performance of some service as compared to simply getting oneself to the place of work. Finally, there was no evidence that cast any doubt that the allowance paid was not reasonable.

Administrative Policy

2 February 2017 Quebec CPA Individual Taxation Roundtable Q. 1.7, 2016-0674811C6 F - Allocations automobiles & dépenses afférentes

if vehicle allowance is too low, employee can include the allowance and deduct the vehicle expenses/T2200 production expected

In discussing the situation where an employer limits the number of kilometers travelled by an employee in the course of employment for which it will pay a per-kilometer allowance, e.g., where the employer will stop paying once 10,000 kilometers have been driven in any year, or it does not pay for the first 20 km travelled in each employment-related trip, CRA stated:

In such cases, an allowance may not be high enough in relation to expenses that an employee is expected to incur in a specific situation, and thus not be reasonable. If applicable, the allowance is a taxable benefit that the employee will have to include in employment income in accordance with paragraph 6(1)(b). An employee may, however, if all of the requirements are met, claim the deductions provided in paragraphs 8(1)(h), (h.1) or (j). …

In addition, the CRA has stated…that where an employee elects to include in income the amount of a non-taxable motor vehicle allowance, the taxpayer can deduct the expenses for that vehicle which were actually incurred and which are otherwise deductible on condition that the taxpayer can demonstrate that such expenses are in excess of the allowance in question.

CRA also stated:

An employer is not required to complete or sign Form T2200 for an employee if the employer is of the opinion that the conditions of employment set out in paragraph 8(1)(h.1) or any of the other provisions referred to in subsection 8(10) are not satisfied. However, the CRA expects employers to complete Form T2200 in situations where employees have reasonable grounds to claim a deduction under paragraph 8(1)(h.1) or under the other provisions of section 8 referred to in subsection 8(10).

Locations of other summaries Wordcount
Tax Topics - Income Tax Regulations - Regulation 200 - Subsection 200(3) correction of T4s 171

27 October 2014 External T.I. 2013-0507001E5 F - Obligation de remplir un T2200 pour un employé

employer expected to provide T2200 if applicable

Does the employer have an obligation to complete a form T2200 at the employee's request? CRA responded (TaxInterpretations translation):

An employer is not obliged to complete and sign a form T2200 for an employee if it knows that the conditions specified in paragraph 8(1)(h.1)…are not satisfied. CRA expects that employers will provide their employees with a duly completed and signed form T2200 in situations where the conditions set out in paragraph 8(1)(h.1) are satisfied.

19 August 2014 External T.I. 2014-0529741E5 F - Frais afférents à un véhicule à moteur (chantiers)

usual places of work of an employee (which can be multiple locations based on where the employee reports for work) is each a place of business of the employer

A construction employee is required to go from his residence to the various work sites of his employer. He works only a few days per construction site, for a total of about forty construction sites in the year. Does he satisfy the s. 8(1)(h.1) requirement that he is ordinarily required to carry on the duties of employment away from his employer’s place of business or in different places? Before indicating that this was a question of fact, CRA stated:

[W]here an employer has work sites at different locations to which the employee must report regularly in the course of employment, the CRA considers that prima facie the employee's travelling between teh employee's place of residence and the work sites to be of a personal nature. However, employees can claim their vehicle expenses under paragraph 8(1)(h.1) if they demonstrates that they are ordinarily required to carry on their duties of employment away from the places of business of their employer, and that the vehicle expenses were incurred in the performance of their duties.

The usual place of work of an employee constitutes a place of business of the employer. The place of business of the employer is established in relation to the employee (Nelson v. MNR, 81 DTC 190 (TRB)) and is generally the place where the employee must report for work to receive on-site instructions. An employee can have more than one usual place of work. In this case, the fact that an employee reports more frequently to one work place than to other places does not prevent the other places from also being usual places of work.

Words and Phrases
place of business

12 September 1997 Memorandum 971645

The requirement that the employee be required under the contract of employment to pay the motor vehicle expenses "may also be considered to have been satisfied where it was testedly understood by the employer and the employee that the employee pay the travel expenses."

Where the employee is in receipt of a per debt kilometre allowance that is X% of the rate in Regulations 7306, the employee will be precluded from deducting motor vehicle travel expenses under s. 8(1)(h.1) if this allowance is not included in her income (as might be the case if the allowance is reasonable in amount).

The employee is not precluded from deducting motor vehicle expenses under s. 8(1)(h.1) if she elects not to draw on an allowance made available to her by her employer.

Paragraph 8(1)(i) - Dues and other expenses of performing duties

Subparagraph 8(1)(i)(i)

Commentary

S. 8(1)(i)(i) provides for the deduction in computing a taxpayer's income from an office or employment of annual professional membership dues whose payment is necessary to maintain a professional status recognized by statute.

This requirement will be considered to be satisfied where one or more provincial statutes require that certain services be performed by a member of the body to which the dues in question are paid (Montgomery). There is no requirement that the dues be paid to a body that is provincially regulated.

Cases

Montgomery v. Canada, 99 DTC 5186 (FCA)

The taxpayer, a Revenue Canada appraiser to the Appraisal Institute of Canada, who paid fees to the Appraisal Institute of Canada, which was not given any special status by statute although three provincial statutes or the regulations thereunder required certain appraisals to be performed by a member of that or a similar institute. In finding that the taxpayer was entitled to deduct the fees, Rothstein J.A. stated (at p. 5189):

"The dictionary definition of 'recognized' is, in this context, 'to acknowledge the existence, validity, character or claims of' ... . Parliament intended to restrict the meaning of 'recognized' to include the requirement of being 'incorporated', 'created' or 'regulated' by statute, it was open to it to use words to that effect."

Words and Phrases
recognized

The Queen v. Mousseau, 95 DTC 5089 (FCTD)

An appraiser who was required to pay annual dues to the Appraisal Institute of Canada in order to maintain his A.A.C.I. designation was unable to point to any legislative enactments in effect in the taxation year in question (1987) which made reference to the designation of A.A.C.I.

Petrin v. The Queen, 91 DTC 5266 (FCTD)

Because the Appraisal Institute of Canada and the Institute of Municipal Assessors are not recognized by statute, annual professional membership dues paid to them by the taxpayer were not deductible from his employment income.

The Queen v. Swingle, 77 DTC 5301, [1977] CTC 448 (FCTD)

A highly educated chemist who was employed by the federal Department of Transport and who was designated as an analyst pursuant to S.731(1) of the Canada Shipping Act (for the purposes inter alia of giving certificates as to pollution counts) did not have a professional status that was recognized by statute, and fees paid to various chemical and allied societies accordingly were non-deductible.

Collier, J. indicated in obiter dicta that the question of necessity should be determined by reference to the practical and business sense of what is necessary.

See Also

Auclair c. La Reine, 2013 DTC 1199 [at 1058], 2013 TCC 188 (Informal Procedure)

liquidated damages for unamortized training costs

The taxpayer left his position at an airline soon after having been sent to a $12,000 flight course. Pursuant to his employment contract, he reimbursed the employer approximately $9000 of his training costs. He sought to deduct this amount under s. 8(1)(i)(iii). Masse DJ dismissed the taxpayer's appeal as training is not a "supply" (namely, "material used directly in the performance of employment duties" - para. 28) that can be "consumed" (i.e., "rendered useless by being used - para. 35) in the performance of duties of employment. Furthermore (para. 39):

The amount paid was as damages liquidated in advance, payable upon termination of employment and not in the performance of the appellant's employment duties.

Shearman v. The Queen, 2006 DTC 2678, 2006 TCC 143 (Informal Procedure)

The taxpayer was not entitled to amounts paid to the Canadian Physiotherapy Association (the "CPA") comprising a insurance fees and membership dues. The insurance fees were not member ship dues. As for the CPA membership dues, although CPA membership enhanced her professional status, such membership was not required for any professional status recognized by statute.

Laithwaite v. The Queen, 95 DTC 710 (TCC)

A requirement pursuant to the Expropriation Act (B.C.) that an appraisal report be prepared by an accredited person (including a person designated by the Appraisal Institute of Canada) was not sufficient to establish that membership in the Appraisal Institute of Canada "was necessary to maintain a professional status recognized by statute"

Institute of Leisure and Amenity Management v. C. & E. Cmners, [1988] BTC 5160 (Q.B.D.)

The members of a non-profit organization formed to provide a central organization for persons described as engaged in the "profession" of leisure and amenity management, were not practising a "profession". The "fact that the association was set up to serve the needs of a particular industry, the leisure industry, makes it more difficult, in my judgment, to regard it as a professional body as compared with a body serving all those with a skill or technique of general application."

Words and Phrases
profession

Administrative Policy

11 September 1996 T.I. 962253 (C.T.O. "Annual Professional Membership Dues")

A trainee enrolled as a member of the Association of British Columbia Professional Foresters is not entitled to the deduction because the trainee is not permitted to practise professional forestry.

The deduction also is not available for late payment penalties or for the fee payable upon becoming reinstated as a member.

1995 Institute of Chartered Accountants of Alberta Round Table, Q. 6 (C.T.O. "Professional Dues" No. 9511910)

In accordance with RC's policy of fairness, professional membership dues that are paid by an employer and included on the employee's T4 as a taxable benefit are deductible by the employee if they otherwise qualify under s. 8(1)(i).

23 June 1995 T.I. 950085 (C.T.O. "Professional Dues")

With respect to the situation where annual fees payable to the Barreau du Quebec are paid by the employer, RC stated that it "considers that an amount in respect of such dues paid by his or her employer in circumstances where the employer is required to include the payment in the employee's income as a taxable benefit is effectively an amount paid by the employee".

13 July 1992 T.I. 921266 (January - February 1993 Access Letter, p. 9, ¶C5-183)

The amount of professional membership dues deductible under s. 8(1)(i)(i) includes GST paid thereon.

22 January 1991 Memorandum (Tax Window, Prelim. No. 3, p. 20, ¶1082)

In the case where the payment of professional membership fees of an employee by his employer is a taxable benefit, the fees are deductible to the employee if the otherwise qualify under s. 8(1)(i).

Subparagraph 8(1)(i)(ii)

Commentary

S. 8(1)(i)(i) provides for the deduction from a taxpayer's income from an office or employment of office rent, or the salary of an assistant or substitute, the payment of which was required by the contract of employment.

Home mortgage payments do not qualify as rent (Thompson).

Some commissioned brokers or sales persons have been successful in deducting salaries paid to their spouses even though their contracts of employment did not explicitly contemplate that they would retain their spouses as assistants (Longtim, Schnurr, cf. Vickers, see also Aprile).

The requirement that the assistant's salary be paid by the taxpayer can be satisfied if the taxpayer's employer pays the salary and the taxpayer reimburses the employer for those amounts (Williams).

Cases

The Queen v. Thompson, 89 DTC 5439 (FCTD)

A salesman was not permitted to deduct a portion of his home mortgage payments, alleged to relate to his home office, as "rent". McNair quoted with approval (at p. 5443) a statement by Rip TCJ in Felton v. MNR, 89 DTC 233 (TCC) that the word "rent" contemplates "a payment by a lessee or tenant to a lessor or landlord who owns the office property in return fro the exclusive possession of the office, the property leased by the latter to the former."

See Also

Massicolli v. The Queen, 2013 DTC 1049 [at 266], 2012 TCC 344

The salary paid by the taxpayer (a commissioned securities broker) to his wife was non-deductible given his admission that the decision to hire and pay an assistant was in his discretion, and given that "the hiring of an assistant was not essential to the performance of the duties of his employment" (para. 72).

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 67 220

Vickers v. The Queen, 2011 DTC 1066 [at 354], 2011 TCC 2 (Informal Procedure)

The taxpayer, employed as an investment advisor, hired his wife as an assistant. Hogan J. found that her salary was not a deductible employment expense, remarking at paras. 17 -19:

The [taxpayer's] evidence that his spouse filled our forms and attended social functions in no way suggests that his spouse's services were necessary for the [taxpayer] to be able to carry out the duties of his employment as an investment advisor.

Longtin v. The Queen, 2006 DTC 3254, 2006 TCC 335

In finding that the taxpayer, a sales person on salary and commission, was entitled to deduct the salaries of over $26,000 he paid to his wife (who forwarded telephone messages and fax messages to him while he is on the road, kept track of expenses and assisted him in entertaining), Margeson J. stated (at p. 3258):

"The Court is further satisfied that under the provisions of subparagraph 8(1)(i)(ii) in order for the Appellant to deduct the assistant's salary, he need only show that under his contract of employment he is required to pay her salary. There is no need for him to show that his contract of employment required him to have an assistant."

Aprile v. The Queen, 2005 DTC 585, 2005 TCC 216 (Informal Procedure)

Bell J. rejected the Crown's submission that the taxpayer can only make a deduction under s. 8(1)(i) for amounts paid in cash or by cheque with proof of payment, and found that the taxpayer was entitled to a deduction under s. 8(1)(I)(ii) for snowmobiles, motorcycles and gasoline that he had purchased for his sons as payment for their services in performing mailings to 2,500 people on five different occasions in the year.

Locations of other summaries Wordcount
Tax Topics - General Concepts - Payment & Receipt payments in kind 72

Schnurr v. The Queen, 2004 DTC 3531, 2004 TCC 684

Bowman A.C.J. found that it was implicit in the relationship between the taxpayer and his employer (a brokerage firm) that in order to generate business he was required to hire someone to perform the type of services that, in fact, his wife performed, namely, keeping records of clients at his home, attending to the mailing of Christmas cards, purchasing gifts for clients, and making contacts in the community to bring clients to her husband. Accordingly, and notwithstanding that the employer subsequently changed the written certificates previously given by it so as to indicate that the taxpayer was not required under a contract of employment to pay for an assistant, the cost of her salary ($24,000 in one year and $30,000 in the next) was deductible by the taxpayer.

Williams v. The Queen, 2004 DTC 3549, 2004 TCC 706

The taxpayer, who was a security analyst for a brokerage firm, was responsible for employment expenses which he incurred in performing his duties including remuneration paid to his sales assistant. Miller J. found that the salary of the assistant was "expended" by the taxpayer notwithstanding that the assistant received payment of such salary from the brokerage firm with such payment then becoming owing by the taxpayer to the brokerage firm, and went on to find that payment of the assistant's salary was required by the taxpayer's contract of employment notwithstanding the absence of an explicit provision to this effect. Miller J. stated (at p. 3554):

"... Paragraph 8(1)(i) does not stipulate that an assistant must be 'required by the contract of employment', but that the payment of salary to an assistant was required by the contract of employment."

Glen v. The Queen, 2003 DTC 2109, 2003 TCC 807 (Informal Procedure)

Payments made by a professional appraiser, who was employed part-time as a lecturer at a university, to assistants for the marking of exams were not deductible as there was no evidence that markers were required in his contract of employment with the university.

Felton v. MNR, 89 DTC 233 (TCC)

Since at common law "rent" connates only a payment arising out of a landlord-tenant relationship, home office expenses of the taxpayer (i.e., a pro rata portion of mortgage interest, municipal taxes, insurance premiums and utilities) were not deductible. [C.R.: 248(1) - "former business property"]

Administrative Policy

8 February 1994 Memorandum 940065 (C.T.O. "Employment Expenses")

Although ordinarily the requirement in the contract of employment to provide a work space necessitates that there be an expressed requirement in the written contract of employment, it is RC's general position that this requirement may also be considered to have been satisfied where it is understood by the employer and the employee that the work space be provided by the employee.

Subparagraph 8(1)(i)(iii)

See Also

Meberatu v. The Queen, 2017 TCC 211 (Informal Procedure)

employee could deduct cell phone expenses

The taxpayer was a personal support worker who had deducted alleged work-related expenses in computing her employment income for her 2010 to 2012 taxation years including cell phone expenses of around $900 per year. In partially allowing her claim, , Graham J stated (at paras 18-20):

I accept that Ms. Meberatu used her cell phone to contact clients before arriving at their homes, to notify clients if she was going to be late, and to report to her employers. I also accept that her employers required her to have a cell phone for this purpose and did not reimburse her for the costs of that phone. Based on the foregoing, I conclude that Ms. Meberatu is entitled to a deduction for cell phone expenses in each year.

That said, Ms. Meberatu did not enter any cell phone bills into evidence. …

In the circumstances, I have two choices. I can either not allow Ms. Meberatu any cell phone expenses on the basis that she has not proven that she incurred those expenses or I can acknowledge that she must have incurred some cell phone expenses and make a conservative estimate of those expenses. The second option seems more equitable. I will accordingly allow Ms. Meberatu $120 per year in cell phone expenses, being $10 per month. This amount is a conservative estimate of Ms. Meberatu’s actual costs. I am not prepared to reward her failure to produce documents and provide a reliable breakdown of her employment-related cell phone use by using a middle or high estimate. If Ms. Meberatu wanted her income to be determined accurately, she should have provided a means for me to do so.

Glen v. The Queen, 2003 DTC 2109, 2003 TCC 807 (Informal Procedure)

The cost of software that the taxpayer purchased for use in connection with his part-time teaching duties was deductible. McArthur J. stated at (p. 211) that "the software was consumed directly in the performance of the Appellant's teaching duties and his contract surely implies that to perform his duties, he needed updated software".

Cuddie v. The Queen, 98 DTC 1822 (TCC)

After quoting from a statement in Luks No. 2 v. MNR, 58 DTC 1194 (Ex Ct) that "supplies" are "things which are consumed in the performance of the duties of employment", Bell TCJ. found that expenses incurred by the taxpayer in respect of haircuts, a pager, basic telephone service, gloves, flashlights and handcuff keys were not in respect of "supplies".

Words and Phrases
supplies

Administrative Policy

11 July 1995 T.I. 950823 (C.T.O. ) "Work Space Deductible as Supplies")

"Work space expenses which are deductible as 'supplies' under subparagraph 8(1)(i)(iii) of the Act consists of a reasonable proportion of expenses paid or the maintenance of the work space such as the cost of fuel, electricity, light bulbs, cleaning and material and minor repairs ... . [O]nly expenses (deductible as supplies) related to work space and not supplies consumed in the performance of employment duties are subject to subsection 8(13) rules."

26 July 1994 T.I. 941545 (C.T.O. "Employment Benefits - Special Clothing")

The word "supplies" is limited to materials that are used up directly in the performance of the duties of employment, and does not include special clothing customarily worn by employees in the performance of their duties. In addition, there is no provision within s. 8(1)(i) that would permit a deduction in respect of personal grooming costs.

9 February 1994 T.I. 933587

The word "supplies" is limited to materials that are used up directly in the performance of the duties of employment, such as gasoline and oil used in the operation of power saws owned by employees in wood operations, dynamite used by miners, bandages and medicines used by salaried doctors and stationery items used by teachers. However, they do not include special clothing customarily worn or required to be worn by employees in the performance of their duties, and any types of tools which fall into the category of equipment. The cost of a knife used for shucking scallops is deductible provided that it has a relatively short life span and a small cost.

Subparagraph 8(1)(i)(iv)

Cases

Crowe v. Canada, 2003 DTC 5288, 2003 FCA 191

Dues paid by the taxpayer to the Alberta Provincial Judges' Association were not deductible given that "as ordinarily understood, the term 'public servants' does not include judges but approximates to 'civil servants' or 'government employees', not independent office holders" (p. 5291) and "given the labour relations context of subparagraph 8(1)(i)(iv), it would be incongruous to find in the same category, namely, 'public servants', two fundamentally different groups of workers: those who may bargain over terms and conditions of employment or work and those who are constitutionally precluded from such activities" (p. 5295).

Lucas v. The Queen, 87 DTC 5277, [1987] 2CTC 23 (FCTD)

Dues in order to be considered annual must be of a recurring kind, as opposed to initiation or entrance dues paid once and for all on becoming a member. An increase in the annual dues of the Alberta Teachers' Association in response to the financial drain from a teachers' strike in Calgary was deductible to the member in the face of the Crown's contention that the increase should be characterized as a special levy. Although this increase did not recur, it was capable of recurring.

Locations of other summaries Wordcount
Tax Topics - Statutory Interpretation - Resolving Ambiguity 23

See Also

Whitby v. MNR, 89 DTC 348 (TCC)

The Ontario Medical Association, which was a voluntary association promoting and protecting the interests of medical doctors in Canada, was not a "trade union", i.e., an organization of employees established to regulate the relations between employers and employees.

Words and Phrases
trade union

Administrative Policy

5 May 2017 External T.I. 2016-0681161E5 - Deductibility of annual membership dues

a trade union need not be certified

An Association collectively negotiates conditions of employment (e.g., salaries, benefits, hours of work) for its members with the Employer, but is not a certified labour organization, and management and certain non-management employees holding positions that require confidentiality will automatically become members of the Association when hired by the Employer. The Association proposes to have the Employer collect annual dues from all Members on its behalf through payroll deduction and use the dues solely to defray the Association’s ordinary operating expenses and for no other purpose. Are such dues deductible by the employees under s. 8(1)(i)(iv)?

Before concluding that the Association would likely be considered a trade union, so that annual dues paid to maintain membership in the Association likely would be deductible, CRA stated that under its established position:

[A]n association does not have to be certified trade union in order to be considered a trade union for purposes of subparagraph 8(1)(i)(iv)… . Generally, an association whose primary purpose is to collectively negotiate with an employer to further the working conditions of its members is considered to be a trade union for purposes of subparagraph 8(1)(i)(iv).

Words and Phrases
trade union

1 April 2014 External T.I. 2013-0513781E5 - Trade union dues

non-certified union

An employee association (the" Association") is a company-wide organization that collectively negotiates employment agreements covering compensation, benefits, and occupational health and safety but is not certified by Human Resources and Skills Development Canada as a labour organization. All non-management employees are required to be members and the employer collects Association dues bi-weekly via payroll deduction. Before concluding that the Association likely would be considered a trade union for purposes of s. 8(1)(i)(iv), CRA stated:

[A]n association need not be certified as a trade union to be considered a trade union for [such] purposes…[and] an association which negotiates collectively with an employer for improvements in the members' working conditions is generally considered to be a trade union for [such] purposes… .

Paragraph 8(1)(j) - Motor vehicle and aircraft costs

Administrative Policy

10 September 1990 T.I. (Tax Window, Prelim. No. 1, p. 17, ¶1009)

Where an employee begins a drive between home and the employer's place of business and during the course of that drive is contacted by a cellular phone and diverted to another place to perform an employment activity, the portion of the drive from the point of the diversion will be considered employment related and the portion of the drive up to that point will be considered to be personal in nature.

Paragraph 8(1)(m) - Employee’s registered pension plan contributions

Cases

The Queen v. Kurisko, 88 DTC 6434, [1988] 2 CTC 254 (FCTD), aff'd 90 DTC 6376 (FCA)

6% of a federally-appointed judge's salary was required, by virtue of s. 29.1 of the Judges Act, to be withheld and contributed to the Consolidated Revenue Fund, which was also deemed by that provision to be contributed under a registered pension plan for purposes of the Income Tax Act. It was held that the amount so deemed to be a contribution was also subject to the $3500 limit in s. 8(1)(m). Although this had the effect of subjecting the amount of the contribution over the limit to double taxation (because the pension income would be fully taxable), the independence of the judiciary was not undermined.

The Queen v. Hoffman, 85 DTC 5508, [1985] 2 CTC 347 (FCTD)

U.S. social security contributions made by a U.S. citizen who was a Canadian resident employee were not deductible under s. 8(1)(l) or (m).

Administrative Policy

13 June 1991 T.I. (Tax Window, No. 4, p. 30, ¶1305)

If an employer's excess contributions to a health and welfare trust are transferred to a pension plan, the transferred amount is neither an employer contribution nor an employee contribution, and is not deductible by the employee under s. 8(1)(m).

19 April 1990 T.I. (September 1990 Access Letter, ¶1407)

Discussion of situation where individual receives tax-free long-term disability payments from an insurance company and as part of the same arrangement the insurance company makes contributions to a registered pension plan on behalf of the employee.

Paragraph 8(1)(m.2) - Employee RCA contributions

Articles

"Employee Contributions to Unregistered Pension Plans Are Now Permitted", Taxation of Executive Compensation and Retirement, October 1990, p. 342.

Paragraph 8(1)(n) - Salary reimbursement

Administrative Policy

19 December 2016 External T.I. 2016-0643191E5 F - Deferred Salary Leave Plan (DSLP)

deduction where “repayment” of advances made during employee leave

In the course of a comprehensive discussion of the deferred salary leave plan (“DSLP”) rules in Reg. 6801(a), CRA provided an example of an arrangement in which, during an employee leave, the employee first receives amounts whose recognition was deferred under the DSLP rules, and then receives advances of salary or wages which are to be earned after returning – with CRA stating that both types of amounts “must be included in the employee's income in the leave year under subsections 6(3) and 5(1).” After noting that such an arrangement implies a “repayment period” in which the advances are repaid out of reduced pay cheques following the return to work, CRA stated:

Paragraph 6801(a) does not apply during the repayment period, as there is no deferred amount or an EBP [employee benefit plan] within the meaning of subsection 248(1) of the Act during that period. Subsections 6(3) and 5(1) of the Act require that the total salary or wages earned by the employee during that period (the gross amounts, before deduction of the repayment amounts) be included in income. However, paragraph 8(1)(n) of the Act applies so that the employee can deduct from his or her employment income the amounts deducted by the employer as repayment of the employee advances received by the employee during the leave.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 5 - Subsection 5(1) salary advance arrangement results in recognition when advances made rather than when earned 123
Tax Topics - Income Tax Regulations - Regulation 6801 - Paragraph 6801(a) comprehensive discussion, including: seasonal workers cannot participate; and DSLP can be married with a salary advance arrangement 436

26 April 2016 Internal T.I. 2015-0623571I7 - one-time salary transition payment

deduction for repayment of transitional advance

CRA considered that an advance to an employee is current s. 5 income to him or her even if the advance is required to be repaid if the future services are not performed. Accordingly, a “transitional payment” made to employees, as a result to switching the payroll system to an arrears system, would be currently taxable even if the employees were required to repay any overpayment on termination of employment.

Respecting the deduction under s. 8(1)(n) for a repayment, CRA stated:

[A]n employee may claim a deduction from employment income for any repayment of all or part of a salary advance that was previously included in the employee’s income and that was for a period which he or she did not perform the duties of employment. This deduction is available in the tax year in which the repayment is made and cannot exceed the advance that was previously included in the employee’s income… .

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 5 - Subsection 5(1) advance to employee is current s. 5 income 229
Tax Topics - Income Tax Act - Section 80.4 - Subsection 80.4(1) employee advance not a “loan” 115

16 March 2015 External T.I. 2014-0524371E5 F - Assessment beyond normal reassessment period

no reversal of taxable benefits if repaid in subsequent year

An individual after being assessed for taxable benefits for certain years was subsequently required by his employer to reimburse the employer for the benefit amounts. Could s. 152(4.2) be applied to reverse the taxable benefit amounts in the years of assessment?

CRA noted that, in contrast to 2011-0394301I7, where "an error had been committed and there was no basis for including the amount in the computation of the taxpayer's income," here "the benefits were rightly considered taxable in the years of their grant" (TaxInterpretations translation).

Even if s. 152(4.2) applied, a deduction would not be permitted as "only the reimbursements of remuneration specifically contemplated by the terms of paragraph 8(1)(n) are a permissible deduction in the computation of the income of a taxpayer derived from an office or employment, and that paragraph does not contemplate the type of reimbursement which you envisage."

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 152 - Subsection 152(4.2) s. 152(4.2) not applicable if amount was not erroneous at time of return filing 100

S1-F2-C3 - Scholarships, Research Grants and Other Education Assistance

After noting that education-related expenses paid by an employer are considered employment income (at paras. 3.11-3.12), CRA stated:

3.13 Where a student is required to repay an employer for education expenses the employer previously incurred on their behalf, the student will be entitled to deduct the repayment under paragraph 8(1)(n) where the repayment is made by or on behalf of the student in the year pursuant to an arrangement requiring the reimbursement of any amounts received for a period throughout which the student did not perform the duties of the office or employment. However, the deduction under paragraph 8(1)(n) will be limited to the extent that:

  • the amounts received were included in computing the student's employment income; and
  • the total reimbursements do not exceed the total of the amounts received by the student for the period throughout which the student did not perform the employment duties.

13 June 2012 Internal T.I. 2012-0448961I7 F - Paiements en trop faits par un employeur

clerical error v.repayment

An employee was on extended sick leave but nonetheless received remuneration from the payroll service, which was not informed of the leave. On the employee's return to employment a number of years later, the error was discovered, and it was agreed that the overpayments would be repaid over time through deduction from the employee's post-return remuneration. In applying RC4120 (below), the employer treated this as a situation of overpayment of remuneration for duties not performed, rather than a situation of clerical or administrative error. CRA stated (TaxInterpretations translation):

...the overpayments were instead made by reason of an administrative or clerical error. In such a case, the amounts received by the employee are not considered as salary as the employee had no right to them.

As indicated in the section of Guide RC4120 entitled "Clerical or administrative errors," the employer should issue a revised T4 form for the taxation year in question (XXX in this case) excluding the amounts of the excess payments. ...Nonetheless, no change can be made to the T4 slips for the XXX taxation years to reduce employment income for the reimbursed amounts. In addition, the fact that the employee reimburses the overpayments gradually does not constitute a non-interest bearing loan. Accordingly, the employer should not calculate a taxable benefit for imputed interest.

Following the issuance by the payroll service of a revised T4 slip for the XXX taxation year, the employee can request CRA to make an adjustment to the statement of income and benefits for the taxation year XXX in order to refund, if applicable, the excess tax paid in the course of that year.

Employee did not perform duties

When an employee repays you, in the same or a later year, for salary or wages received when the employee did not perform his or her duties, the repayment is considered to be a repayment of salary and wages. Examples include:

  • an employee who is on a leave of absence and receives salary and disability payments for the same period of time;
  • an employee who was advanced vacation leave credits, but quit working for you before actually earning the credits; or
  • an employee who was paid a signing bonus but did not work for the time agreed to in the employment contract.

Your employee should repay you the gross amount of the salary overpayment. You cannot adjust the employee's T4 slip or the payroll records to reduce the total employment income or source deductions by the amount of the repayment.

Clerical or administrative errors

We will not consider an amount to be salary, wages, or an advance in the year the employee received it if the employee is overpaid because of an administration or clerical error (mistake). If you discover the error after issuing a T4 slip for the employee, you must issue an amended T4 slip for that year to exclude this amount.

However, the amount should be included on a T4 slip in the following situations:

  • The employee says he or she will repay the amount and does not. Include the amount in employment income in the year the employee agrees to repay the amount but does not.
  • The employee says he or she will not repay the amount. Include the amount in employment income in the year of the overpayment.
  • The employer forgoes his or her right to the amount. Include the amount in employment income in the year of forgiveness.
  • There was knowledge or collusion and the employee does not repay the amount. Include the amount in employment income in the year of the overpayment.

Articles

Christina Medland, Jennifer Sandford, "Tax Treatment of Share-Based Compensation", Taxation of Executive Compensation and Retirement, September 2005, p. 583.

Paragraph 8(1)(p) - Musical instrument costs

See Also

Belkin v. The Queen, 2006 DTC 2016, 2005 TCC 785 (Informal Procedure)

The taxpayer (a professor of music) claimed capital cost allowance under s. 8(1)(p) for the capital cost of a Macintosh computer he used to simulate the orchestral sound that could be produced from musical compositions.

Lamarre Proulx J. stated (at p. 2019):

"My conclusion is that for the person who is employed as a musician and as a term of his employment is required to provide a computer for teaching musical subjects such as composition and orchestration, a computer is within the meaning of a musical instrument."

Paragraph 8(1)(q) - Artists’ employment expenses

Administrative Policy

20 August 1992 T.I. 922074 (April 1993 Access Letter, p. 131, ¶C5-191; Tax Window, No. 23, p. 21, ¶2158)

Film editors, film directors, sound editors, directors of photography, art directors and costume directors would not qualify unless they belong to a professional artists' association certified by the Department of Communications.

Subsection 8(2) - General limitation

See Also

Jamieson v. The Queen, 2013 DTC 1067 [at 367], 2013 TCC 52 (Informal Procedure)

The taxpayer was trained as a lawyer, but worked as a vice president of one corporation and as the corporate secretary of several affiliated corporations. VA Miller J affirmed the Minister's decision to deny the deduction of various alleged business expenses, including over $5000 in travel expenses, stating that "being a lawyer is not in and of itself a business" (para. 8). The taxpayer was found to be an officer, and hence an employee, of the corporations.

Kilbride v. The Queen, 2007 DTC 1718, 2007 TCC 663

The taxpayer, who performed functions similar to that of a CFO for a family-owned company and also dealt with other managerial functions when his father and brother were on the road, and who had no other source of income, was found to be an employee, so that even if he had been able to establish that he had incurred expenses for which he was not reimbursed, such expenses would have been non-deductible.

Bushfield v. The Queen, 95 DTC 851 (TCC)

The taxpayer was unsuccessful in deducting expenses incurred by him in seeking election as an Ottawa Board of Education Trustee.

Administrative Policy

S3-F4-C1 - General Discussion of Capital Cost Allowance

No terminal loss

1.101 A terminal loss cannot be claimed in the case of depreciable property for which CCA was claimed in computing income from an office or employment (see paragraphs 8(1)(j) motor vehicle and aircraft costs and 8(1)(p) musical instrument costs). This is because subsection 8(2) restricts the deductions that can be claimed in computing income from an office or employment to those permitted by section 8… .

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 18 - Subsection 18(1) - Paragraph 18(1)(b) - Capital Expenditure v. Expense - Improvements v. Repairs or Running Expense 476
Tax Topics - Income Tax Act - Section 13 - Subsection 13(21) - Undepreciated Capital Cost - A 669
Tax Topics - Income Tax Act - Section 13 - Subsection 13(21) - Depreciable Property 170
Tax Topics - Income Tax Act - Section 16.1 - Subsection 16.1(1) 248
Tax Topics - Income Tax Act - Section 13 - Subsection 13(28) 194
Tax Topics - Income Tax Act - Section 13 - Subsection 13(27) 178
Tax Topics - Income Tax Act - Section 13 - Subsection 13(29) 145
Tax Topics - Income Tax Regulations - Regulation 1100 - Subsection 1100(2) 184
Tax Topics - Income Tax Regulations - Regulation 1100 - Subsection 1100(2.2) 267
Tax Topics - Income Tax Regulations - Regulation 1100 - Subsection 1100(3) 60
Tax Topics - Income Tax Act - Section 18 - Subsection 18(3.1) 140
Tax Topics - Income Tax Act - Section 13 - Subsection 13(7.5) 167
Tax Topics - Income Tax Act - Section 261 - Subsection 261(2) 53
Tax Topics - Income Tax Act - Section 128.1 - Subsection 128.1(1) - Paragraph 128.1(1)(b) 204
Tax Topics - Income Tax Regulations - Regulation 1102 - Subsection 1102(1) - Paragraph 1102(1)(c) 150
Tax Topics - Income Tax Act - Section 13 - Subsection 13(7) - Paragraph 13(7)(e) 55
Tax Topics - Income Tax Act - Section 43 - Subsection 43(1) 142
Tax Topics - Income Tax Act - Section 68 153
Tax Topics - Income Tax Act - Section 13 - Subsection 13(21.1) - Paragraph 13(21.1)(a) 65
Tax Topics - Income Tax Act - Section 13 - Subsection 13(21.1) - Paragraph 13(21.1)(b) 117
Tax Topics - Income Tax Act - Section 13 - Subsection 13(1) 403
Tax Topics - Income Tax Act - Section 20 - Subsection 20(16.1) 142
Tax Topics - Income Tax Act - Section 13 - Subsection 13(9) 207
Tax Topics - Income Tax Act - Section 152 - Subsection 152(4) 299
Tax Topics - Income Tax Regulations - Schedules - Schedule II - Class 8 214
Tax Topics - Income Tax Act - Section 13 - Subsection 13(5) 259
Tax Topics - Income Tax Act - Section 13 - Subsection 13(6) 191

17 August 1992 T.I. (Tax Window, No. 23, p. 20, ¶2137)

An employee may not deduct home telephone expenses even where she is required to be available at home to respond to calls during off-duty hours.

18 October 1990 T.I. (Tax Window, Prelim. No. 1, p. 16, ¶1019)

The exclusion in s. 6(1)(a) will not apply to employer reimbursements of payments by an employee for counselling services in respect of his physical or mental health or that of a family member, and no deduction under s. 8 will be available to him.

79 C.R. - Q.39

Since the compensation of an individual executor is income from an office, he is only entitled to expenses specifically allowed in the Act.

Subsection 8(4) - Meals

Cases

Healy v. The Queen, 79 DTC 5060, [1979] CTC 44 (FCA)

In 1973 the appellant was required to work approximately 2/3 of his time at two race tracks located in Metropolitan Toronto, and 1/3 of his time at a race track in Fort Erie. The purpose of s. 8(4) "is to first find the municipality where an employee usually reports for work and then to find whether or not he is entitled to meal expense deduction for having, in the course of his employment, to be away from that municipality for more than twelve hours ... [I]t matters not whether there is only one or there are several establishments in the 'base' municipality". Since the appellant commonly and usually, or "ordinarily", worked at the two Toronto race tracks, the deduction was available to him.

Subsection 8(5) - Dues not deductible

Administrative Policy

26 November 2013 External T.I. 2013-0492411E5 - Union Dues

recurring union dues to fund union pension plan shortfall

Employees have a pension plan ("EE plan") that is fully funded by their Union. The Union plans to collect a special union dues levy from the Members ("Dues") over XX years to cover a possible funding shortfall in the EE plan. The Dues are required to maintain Union membership and will be refunded if there is no shortfall. In finding that ss. 8(5)(a) and (c) did not deny the deduction of the Dues, CRA stated:

[U]nion dues used to fund the pension plan of union employees are generally not considered levied for or under a superannuation fund or plan. Further…union contributions to a pension plan for its employees are generally considered to be related to the ordinary operating expenses of the union.

28 December 1995 T.I. 952934 (C.T.O. "Union Owing Shares")

Before noting that the use of surplus operating funds by a union to acquire shares of a business corporation might result in the loss of deductibility of the dues, RC stated that a union's ordinary operating expenses "can be defined as an expenditure which falls into place as part of the undistinguished common flow of the trade union's activity; that the expenditure forms part of the normal business carried on, calling for no remarks and arising out of no special or particular situation."

2 May 1995 T.I. 950640 (C.T.O. "Union Dues - Weekly Levy - Funds for a Law Suit")

A $5 dollar per week levy on all members of a union in order to fund a law suit would not qualify as being in respect of ordinary operating expenses, which "can be defined as an expenditure which falls into place as part of the undistinguished common flow of the trade union's activity". Here, the law suit arose out of a special or particular situation, i.e. , a situation that went beyond what was ordinarily and frequently encountered in negotiations to promote working conditions.

Subsection 8(13) - Work space in home

See Also

Glen v. The Queen, 2003 DTC 2109, 2003 TCC 807 (Informal Procedure)

The taxpayer used an office in his condominium in preparing for lectures as a part-time university lecturer and in speaking to students by telephone or in person. McArthur J. found that the office qualified as the principal location for his university employment.

Administrative Policy

27 October 2014 External T.I. 2012-0471391E5 F - Entreposage d'inventaire à domicile

inventory storage part of work place

A commissioned employee carries out his principal duties at his home where he has a home office as well as being required by his employer to have inventory storage space either in a separate room or the same room for use in client presentations. CRA responded (TaxInterpretations translation):

[T]he inventory storage space could form part of the place where the individual principally performs the duties of his office or employment if the use and storage of the inventory is necessary for the accomplishment of his office or employment at the home.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 18 - Subsection 18(12) separate samples storage room part of home office 86

10 December 2013 External T.I. 2013-0481171E5 - Home Office Expenses

"meetings" must be in person

After noting that "to meet" means for "(two or more people) [to] come into each other's company" and "that some informal Tax Court of Canada decisions have held that the phrase "meeting customers" may include meetings held by telephone," CRA stated:

[T]he phrase "meeting customers or other persons"… includes only face to face encounters.

Words and Phrases
meeting

11 July 1995 T.I. 950823 (C.T.O. ) "Work Space Deductible as Supplies")

"Equipment storage space in the home does not meet the requirements of subsection 8(13) of the Act for work space in the home for deduction proposes."

3 December 1992 Memorandum (Tax Window, No. 27, p. 20, ¶2335)

Salespersons who do not spend the majority of their time working in their home office will not be entitled to deduct the restricted expenses.

The restrictions do not apply to the costs of long distance telephone calls, cellular telephone air time, and stationery items.

15 June 1992 Memorandum 921443 (December 1992 Access Letter, p. 7, ¶C5-180)

An employee is not entitled to claim a deduction under s. 8(13) unless he has also met the conditions set out in s. 8(1)(f), or (i) and s. 8(10).