Principal Issues: Question on taxability of employer-provided reimbursements and/or allowances for travel and motor vehicle expenses where the travel appears to be outside the metropolitan area where the employee has an RPE.
Position: General comments only.
Reasons: The law.
XXXXXXXXXX 2009-033310
October 15, 2009
Dear XXXXXXXXXX :
Re: Motor Vehicle and Travel Allowances
We are writing in response to your correspondence of July 16, 2009, concerning the above-noted issue.
Briefly, in your letter you indicate that some employees are required to perform certain duties of employment using an office that is located in the particular employee's home ("home office"). You also indicate that these employees are also required to report for work at the employer's regional office in Toronto ("employer's office") from time to time throughout the year. You ask whether a travel allowance and/or motor vehicle allowance paid by the employer in respect of travel between an employee's home office and the employer's office could be excluded from the recipient employee's income by virtue of paragraph 6(1)(b)(vii) and/or paragraph 6(1)(b)(vii.1), respectively, of the Income Tax Act (the "Act").
Our Comments
Written confirmation of the tax implications inherent in particular transactions is given by this Directorate only where the transactions are proposed and are the subject matter of an advance income tax ruling request submitted in the manner set out in Information Circular 70-6R5, Advance Income Tax Rulings, dated May 17, 2002. Where the particular transactions are completed, the inquiry should be addressed to the relevant Tax Services Office. We are, however, prepared to offer the following comments.
The Canada Revenue Agency's ("CRA") general position is that travel between an employee's home and the employer's business location is personal, even when the employee has a home office. However, we would note that where an employer has more than one business location and an employee is required to travel from one business location to another business location such travel is considered to be employment related travel.
We also recognize that some recent informal Tax Court of Canada decisions have held that travel between an employee's home office and an employer's business location may be work related; however, each of these cases was very fact specific. Moreover, since section 18.28 of the Tax Court of Canada Act states that informal Tax Court of Canada decisions are not to be treated as a precedent for any other case, our general position remains unchanged.
We trust our comments will be of assistance.
Yours truly,
Rob Ferrari
for Director
Business and Partnerships Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch