9 February 1990 Ministerial Correspondence 74364 F - Travelling Expenses for Tree Planters

Subject: Travelling Expenses for Tree Planters Paragraph 8(1)(h) of the Income Tax Act (the "Act")

This is in response to your enquiry dated September 21, 1989 wherein you have asked our opinion concerning the above-noted subject.  Historically, assessing practice has been to deny travelling expenses of tree planters on the basis that the various sites represented the employer's place of business and hence, the employees were not required to carry on their duties away from the employer's place of business or in different places. Interpretation Bulletin IT 272R states that "in different places" generally refers to the situation where the employer does not have a single or fixed place of business.  This does not mean, however, that the employer cannot have a single fixed place of business in order for an employee to qualify under the "in different places" clauses of paragraph 8(l)(h) of the Act. "Employer's place of business" as used in subparagraph 8(1)(h)(i) of the Act need not necessarily refer to the employer's headquarters or head office but refers specifically to that establishment of the employer for which the employee is hired, to which he is assigned and at which he ordinarily or customarily reports for work.  As summarized by L.J. Cardin, Chairman of the Tax Review Board in Lorne Nelson v. M.N.R. 81 DTC 190, the "employer's place of business" must be interpreted in relation to the taxpayer.

Accordingly, we agree with your conclusion that tree planters may be potentially entitled to deduct travelling expenses but that the determination can only be made on a case by case basis. Certainly those taxpayers that live near a job site and are hired to work on that particular job site only would not qualify to deduct travelling expenses as they would not be required to carry on their duties of employment away from their employer's place of business or in different places. This would be so as the employer's place of business would be the site that they were hired to work at and there is no requirement that they work away from that site nor are they required to work in different places because they are required to work only at that site.  Those taxpayers that are hired on the understanding that they will travel from job site to job site may be able to meet the requirement that they be ordinarily required to carry on the duties of employment in different places. There could however be valid argument in some circumstances that each top site represents the employer's place of business especially in those circumstances where the taxpayer reports to only one or two job sites in the year, where each site can be considered to be an "establishment" of the employer for example, facilities for the worker to report to, eating and sleeping quarters) to which the employee is regularly required to report for work.  Whether an employee can be considered to regularly report for work at any location is a question of fact with consideration given to all relevant facts such as duration of time the site is reported to in relation to other work sites, the wording of the employment agreement if there is one and so forth.

Those tree planters that report to several job sites in the course of the year, that cannot be considered to regularly or ordinarily report to any one place of business of the employer, can clearly meet the "in different places" clause of subparagraph 8(1)(h)(i) of the Act.

For those taxpayers that do qualify to' deduct travelling expenses under paragraph 8(1)(h) of the Act, we offer the following comments and suggestions to your specific queries:

1.     An employee works at a job site for 6 weeks.  The employee has each weekend off and decides to go home during that time.  Where the employee meets all of the criteria outlined in subparagraphs 8(1)(h)(i), (ii) and (iii) then he may deduct amounts expended by him in the year for travelling "in the course of his employment".  We are of the opinion that reasonable travelling expenses representing the cost of travel between the employee's residence and the job site on weekends should be allowed.  Although travel between one's residence and employer's place of business is usually personal in nature, we do not believe that this is the case when one is working either away from the employer's place of business or in different places.

2.     An employee decides to stay at the camp during the weekend while no work is being done.  We believe that the lodging expenses would continue to be deductible even though he is not actually working during the weekend.  This assumes that the employment did not terminate on the Friday (i.e. work resumes on the Monday).  This is consistent with our comments in Interpretation Bulletin IT 357R2, paragraph 5.  We do, however, refer you to our comments following 4.

3.     There is no requirement that an employee travel continuously from job site to job site for expenses to be deductible.  It would seem reasonable to expect that some employees will claim travel expenses from their home to a work site while others will claim travel from one work site location to the next direct site.

4.     An employee works at a job site, goes home after the work is done and then proceeds to the next job site when another contract is scheduled.  This employee would be able to deduct those expenses incurred travelling from home to the first work site location, accommodation expenses incurred while at the site, travelling costs to return home and then subsequent travel costs incurred to report at the second work location.

We do, however, draw your attention to our concerns with the requirements of subsection 8(4) of the Act.  This subsection only allows meals to be deducted in computing a paragraph 8(l)(h) deduction where an employee is required by his duties of employment to be away from the municipality where the employer's establishment to which he ordinarily reported for work was located and away from the metropolitan area, if there is one, where, it was located.  Those tree planters that are considered to ordinarily carry on their duties of employment in different places may not be considered to ordinarily report for work at any particular employer establishment or municipality and hence may be precluded from a meals deduction by virtue of subsection 8(4) of the Act.

We trust that the above comments are of assistance to you.

B.W.  DathDirectorSpecialty Rulings Directorate