CRA denies practice driver’s work-away-from-home prices, is taken to court docket

Article content material

Some taxpayers attempt to write off the price of attending to work as a deductible expense for tax functions. However aside from the odd exceptional case, these bills are denied for the reason that Canada Revenue Agency usually considers the price of driving forwards and backwards between residence and work as a non-deductible private expense.

Article content material

However what for those who determine to remain at a lodge close to your employer’s office in the course of the workweek to attenuate your day by day commute? Are you able to write off the price of your lodging, together with the price of meals whereas dwelling close to your work? Properly, you possibly can definitely attempt. One Ontario taxpayer did and nearly acquired away with it, till the CRA challenged the taxpayer’s employment bills and the matter ended up in Tax Court docket.

Article content material

The latest case concerned a commuter practice operator for GO Transit, the regional public transit service for the Better Toronto and Hamilton Space. The job required him to work from numerous practice stations throughout Ontario. The taxpayer usually resided in Prince Edward County, and the corporate’s residence terminal was Toronto’s Union Station.

Article content material

The taxpayer reported taxable revenue of $130,640 in 2014 and $110,729 in 2015, and claimed employment bills on his tax return of $17,604 and $20,408, respectively. The employment bills consisted largely of lodging bills (about $11,000 in 2014 and $14,700 in 2015), and meals (practically $6,000 in 2014 and $5,700 in 2015).

The CRA initially assessed his tax returns for 2014 and 2015 as filed, however the company subsequently reassessed the taxpayer in 2016 and denied all his employment bills for each years.

The taxpayer defined he was required as a commuter practice operator to work from numerous practice stations forming a part of the GO Transit community. On the trial, the taxpayer testified that in a typical working week, he would depart his residence in Prince Edward County on Sunday afternoon and head by automotive to Oshawa, returning residence solely on Friday evenings after his week’s remaining shift was over. The driving distance between his residence and Oshawa is roughly 160 kilometres, representing a driving time of just about two hours.

Article content material

The taxpayer additional defined that he often began and completed work on the Oshawa GO practice station and never at his employer’s residence terminal positioned in Toronto. Whereas away from residence, he generally stayed at a lodge near the Oshawa GO station or in Pickering, the place he rented an residence close to its GO station for a interval of six or seven months in 2014, at a value of $9,500. He rented a distinct Pickering residence in 2015 at a value of $5,520, and commuted from there to the Oshawa GO station the place he labored.

There’s a particular rule within the Earnings Tax Act that enables transportation workers who’re frequently required to be away from their residence municipality to deduct unreimbursed meals and lodging employment bills. To be entitled to deduct these bills, a number of situations have to be met.

Article content material

First, the employer’s principal enterprise have to be transporting passengers, items or a mixture of each. The taxpayer can also be required to frequently journey away from the municipality the place the employer’s institution is positioned (that’s, the place the taxpayer reported to work). As well as, the taxpayer should journey on automobiles utilized by the employer to move these items or passengers. Lastly, the taxpayer have to be required by their duties of employment to pay for meals and lodging whereas away from their residence municipality.

The worker on this case had a correctly accomplished and signed Canada Revenue Agency Form T2200, Declaration of Circumstances of Employment, on which his employer licensed he was required to pay numerous sorts of bills for which he wouldn’t be reimbursed. Beneath the “Circumstances of employment” part, his employer acknowledged he was required to journey to places that weren’t his office whereas performing his employment duties.

Article content material

The shape additionally famous that the employer required the worker to be away for 12 consecutive hours from the municipality and the metropolitan space the place he routinely reported for work. His employer acknowledged on the T2200 kind that it doesn’t reimburse employment bills incurred by its workers.

The worker additionally accomplished and filed signed copies of the particular kind for transit workers, Form TL2, Claims for meals and lodging expenses, which the taxpayer hooked up to his 2014 and 2015 tax returns.

Article content material

Throughout his testimony, the taxpayer testified his day by day work shift was greater than 12 hours per day, and he gave details about particular routes to point out that. However when cross-examined about his day by day work shift, the taxpayer acknowledged “that lots of his routes lasted lower than 12 hours and have been topic to separate shifts with interruption instances.”

Based mostly on the proof, the choose mentioned the taxpayer had not established that his duties of employment required him to frequently journey away from Oshawa, and away from the metropolitan space the place his employer was positioned, thus necessitating him to incur bills for meals and lodging. The choose famous that Oshawa is within the Durham Area, which is within the Better Toronto Space. The taxpayer, due to this fact, was not in a position to set up that the employment bills he claimed have been incurred outdoors the metropolitan space the place he reported to work.

“The deductions … (are) not supposed for workers who determine, for private causes, to not return to their properties on the finish of every working day,” the choose concluded.

Jamie Golombek, CPA, CA, CFP, CLU, TEP, is the managing director, Tax & Property Planning with CIBC Non-public Wealth in Toronto. Jamie.Golombek@cibc.com.

_____________________________________________________________

In case you appreciated this story, sign up for more within the FP Investor publication.

_____________________________________________________________