Principal Issues: In certain situations, whether travel of an employee between his/her home and some construction sites can be considered made in the performance of the duties of his/her office or employment.
Position: None. Question of fact.
Reasons: Travels that an employee did from home to his/her ordinary place of work are not considered made in the performance of the duties of his/her office or employment.
The determination of the ordinary place of work or ordinaries places of work of an employee is a question of fact that can be determined only after a review of all facts of his specific situation.
FEDERAL TAXATION ROUND TABLE 11 OCTOBER 2013
2013 APFF CONFERENCE
Question 1
Characterization of travel between a residence and a construction site
Under paragraph 8(1)(h.1) of the Income Tax Act ("ITA" or the "Act"), an employee may deduct expenses related to the use of a motor vehicle if certain conditions are satisfied. The characterization of travel between personal travel and travel in the course of employment becomes crucial.
Questions to CRA:
(a) Can a construction worker who is called upon to travel to about 30 construction sites annually at the request of his employer treat travel from his residence to the various construction sites (and the return from the construction site to his residence) as being in the course of his employment (and not as personal travel), if:
- presence at construction sites is short-lived (a few days to a few weeks without exceeding six weeks);
- the employee carries his tools with him; and
- the employee may have to move between two construction sites occasionally at the request of his employer.
Consistently with Evans (footnote 1) and Zembal (footnote 2), we are of the view that this travelling is in the course of his employment and could qualify for the deduction in paragraph 8(1)(h.1) if the other conditions are satisfied.
(b) In addition, certain employees must travel at the request of their employer from construction sites, such as going to a supplier or going to the main place of business of the employer for administrative reasons. Does this kind of situation affect the characterization of travel in the context provided in (a)?
(c) Still recognizing that this is a question of fact, can the Canada Revenue Agency (the "CRA") set out certain criteria that must be met in order for the travel from a residence to a construction site to be characterized as travel in the course of the employment, and not travel of a personal nature?
CRA Response to Question 1(a)
Subject to certain exceptions, paragraph 8(1)(h.1) allows an employee to claim a deduction in computing the employee’s income for amounts expended in the year in respect of motor vehicle travel expenses if the taxpayer meets both of the following conditions:
(1) the taxpayer was ordinarily required to carry on the duties of the office or employment away from the employer’s place of business or in different places, and
(2) the taxpayer was required under the contract of employment to pay motor vehicle expenses incurred in the performance of the duties of the office or employment.
The question of whether travel expenses were incurred in the performance of the duties of an office or employment is a question of fact which can only be answered after having analyzed all the facts of a particular situation.
However, travel by an employee from the employee’s place of residence to the employee’s usual place of employment is not considered as travel in the performance of the duties of the office or employment.
The question of what is the usual place of employment of an employee is a question of fact that can only be resolved after having considered all the facts surrounding the specific situation.
Generally speaking, an employee's usual place of employment is the place where the employee must report for work and receive instructions from the person responsible at the site. An employee may have more than one usual place of work. In this case, the mere fact that an employee reports more frequently to one workplace than to others, does not prevent the other places from also being usual places of employment.
Where an employer has work sites in different places to which an employee must regularly report in the course of the employment, at first sight, we consider that the employee's travel between the employee’s residence and the employer's work sites is of a personal nature.
CRA Response to Question 1(b)
The CRA is of the view that travel between an employee's residence and his or her usual place of work is not carried out in the performance of the duties of the office or employment, even if the employee is required to travel during working hours to different locations at the request of the employer.
CRA Response to Question 1(c)
The CRA has no specific criteria for determining whether an employee's travel is in the performance of the duties of his or her office or employment. On the other hand, the CRA is of the view that an employee's travel between the employee’s residence and the employee’s usual place of work is not considered as travel in the performance of the duties of the office or employment. However, when an employee leaves his or her residence to go to a place other than the employee’s usual place of work or returns from that place to the employee’s residence, this travel will generally be considered as travel in the performance of the duties of his or her office or employment.
Isabelle Landry
(450) 623-0193
2013-049559
FOOTNOTES
Due to our system requirements, footnotes contained in the original document are reproduced below:
1 v The Queen, 99 DTC 168
2 v The Queen, 2011 DTC 1119