Principal Issues: Whether unemployed individuals may deduct travel expense incurred to find employment.
Position: Only employees and self-employed individuals may deduct certain travel expenses from employment and business income, respectively.
Reasons: Where an individual is unemployed, there is no source of income from which to deduct the expense.
XXXXXXXXXX
Dear Colleague:
I am writing in reply to your letter received on May 22, 2007, and the attached letter from XXXXXXXXXX, concerning a tax deduction for construction workers who must travel to find work. I apologize for the delay in responding.
Generally, expenses of a personal nature cannot be deducted from income for income tax purposes. However, there are certain travel expenses that may be deducted from employment income provided the expenses meet the rules described in the Income Tax Act. The attached Interpretation Bulletin IT-522R, Vehicle, Travel and Sales Expenses of Employees, contains additional information in this regard. The bulletin is also available on the Canada Revenue Agency (CRA) Web site at www.cra.gc.ca/E/pub/tp/it522r/it522r-e.html. As well, self-employed individuals earning business income may deduct certain travel expenses that are incurred for the purpose of earning such income. If an individual is neither an employee nor in business, the Act does not allow travel expenses to be deducted.
The CRA is responsible for administering the legislation as passed by Parliament. Your comments with respect to travel expenses for construction workers seeking employment would require an amendment to the legislation, which is the responsibility of the Department of Finance Canada. I am therefore forwarding a copy of your correspondence to the Honourable James M. Flaherty, Minister of Finance, for his consideration.
I appreciate the opportunity to respond to your concerns, and I trust that this referral will be helpful.
Sincerely,
The Honourable Carol Skelton, P.C., M.P.
Attachment
c.c.: The Honourable James M. Flaherty, P.C., M.P.
Minister of Finance
House of Commons
Ottawa ON K1A 0A6
Kathryn McCarthy
(613) 948-6106
2007-023919