Principal Issues: 1. Whether an employee is considered a long haul truck driver. 2. Whether an employee is entitled to deduct an expense for meals incurred while performing work duties using the employer's vehicle. 3. Whether an employer is required to complete Form T2200 for an employee.
Position: 1. Question of fact. 2. & 3. In this case, no.
Reasons: 1. It is a question of fact whether an employee would be considered a long haul truck driver. An employee would have to meet the conditions of subsection 67.1(5) of the Act. 2. An employee is not entitled to deduct an expense for meals incurred while performing work duties using the employer's vehicle unless all the conditions of paragraph 8(1)(h) and subsection 8(4) of the Act are met. 3. An employer is not required to complete Form T2200 for an employee if he/she does not qualify for the expense deduction under paragraph 8(1)(h) of the Act. However, while the signing of Form T2200 by the employer is a prerequisite in order for an employee to be able to claim this deduction, a signed Form T2200 does not provide an employee with any assurance that any expenses incurred are deductible since the employee must be able to demonstrate that the requirements of the specific provision of the Act have in fact been met.
XXXXXXXXXX 2011-039927 C. Underhill
July 26, 2011
Dear XXXXXXXXXX :
Re: Obligation of Employer to Complete Form T2200
I am writing in response to your e-mail of March 16, 2011 concerning Form T2200, Declaration of Conditions of Employment. More specifically, you have enquired whether an employee is considered to be a long haul truck driver, if an employee would qualify to claim a meal expense deduction, and what your obligation is to complete Form T2200, Declaration of Conditions of Employment for an employee.
In the situation you described, an employee delivers the employer's products to customers and company branches in an employer provided vehicle. Usually, an employee's trip is completed in an 8 hour day. Occasionally, an employee is required to deliver the product to a location outside of the municipality in which he/she regularly reports to work, which requires the employee to be away for over 12 consecutive hours from the employer's work establishment. When this occurs, the employee returns home at the end of the day and receives a non-taxable meal allowance for nine dollars.
Our Comments
Written confirmation of the tax implications inherent in particular transactions may only be provided by this Directorate where the transactions are proposed and are the subject matter of an advance income tax ruling submitted in the manner set out in Information Circular 70-6R5, Advance Income Tax Rulings, dated May 17, 2002. This Information Circular and other Canada Revenue Agency ("CRA") publications can be accessed on the Internet at http://www.cra-arc.gc.ca. Where the particular transactions are completed, the inquiry should be addressed to the relevant Tax Services Office. We are, however, prepared to provide the following general comments.
Where an employee incurs expenses in the course of performing employment duties, a deduction is available for certain expenses provided the particular expense is specifically identified in section 8 of the Income Tax Act (the "Act"). In accordance with paragraph 8(1)(h) of the Act, an employee whose main duty of employment is transporting goods, but the employer's principal business is not the transportation of passengers, goods, or both, may be entitled to claim a deduction for travel expenses.
As noted in paragraph 6 of Information Circular IC73-21R9, Claims for Meals and Lodging Expenses of Transport Employees, paragraph 8(1)(h) of the Act permits an employee to deduct travel expenses, such as meals, where all of the following conditions are met:
1. The employee is ordinarily required to carry on the duties of employment away from the employer's place of business or in different places,
2. The employee is required under the contract of employment to pay the travel expenses he or she incurs in the performance of the employment duties,
3. The employee has not claimed a deduction under any of paragraphs 8(1)(e)(f) or (g) of the Act, and
4. The employee is not in receipt of a non-taxable allowance for travel expenses.
The deduction of the cost of meals under paragraph 8(1)(h) of the Act is also subject to the requirements in subsection 8(4) of the Act, which provides that an employee can only deduct the cost of meals consumed during a period while the employee was required to be away for 12 hours or more from the municipality and/or the metropolitan area, if there is one, where the employer's establishment to which the employee regularly reported for work was located. In addition, subsection 67.1(1) of the Act provides that generally an otherwise deductible amount paid or payable in respect of the human consumption of food or beverages or the enjoyment of entertainment is restricted to 50% of the lesser of the amount actually paid or payable and an amount that is reasonable in the circumstances. Therefore, subsection 67.1(1) will generally apply to limit the deductible amount for the costs of the eligible meals to 50% of the lesser of the amount actually paid, or the amount that would be reasonable in the circumstances.
Where an employee meets the conditions of paragraph 8(1)(h) of the Act, subsection 8(10) of the Act requires an employee to obtain a completed Form T2200 from his/her employer. We note that although the signing of Form T2200 by the employer is a prerequisite in order for an employee to be able to claim a deduction for employment expenses, a signed Form T2200 does not provide an employee with any assurance that any expenses incurred are deductible since the Act contains other criteria that the employee must satisfy. For an employee to claim the deduction they must be able to demonstrate that the requirements of the specific provision of the Act have in fact been met.
In accordance with subsection 67.1(5) of the Act, in order to be considered a long haul truck driver, an employee's main duty of employment must be the transporting of goods by way of driving a truck or tractor that is designed for hauling freight and has a gross vehicle weight rating (as that term is defined in subsection 2(1) of the Motor Vehicle Safety Regulations) of more than 11,788 kg. For more information on long haul truck drivers and related meal expense deductions, please refer to CRA Guide T4044, Employment Expenses.
Based on the information provided, an employee may not be entitled to claim a deduction for the meal expense incurred after 12 hours of work since he/she is in receipt of a non-taxable meal allowance for travel expenses. However, where an employee receives an allowance, it is our general position that if an employee can show that the employment-related expenses are in excess of the allowance and voluntarily includes the amount of the allowance in income, the CRA will permit the deduction if the requirements in section 8 of the Act are otherwise met. Where an employee is not entitled to claim a deduction under paragraph 8(1)(h) of the Act, the employer is not obligated to complete and sign Form T2200.
For more information, please refer to IC73-21R9, CRA Guide T4044, Employment Expense Guide, and Interpretation Bulletin IT-522R, Vehicle, Travel and Sales Expenses of Employees.
We trust that our comments will be of assistance to you.
Yours truly,
Phyllis Waugh
A/Manager
for Director
Ontario Corporate Tax Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch