2015-0599631E5 Travel expenses

Principal Issues: Deductibility of expenses for meals and rental accommodations of XXXXXXXXXX truck drivers.

Position: No.

Reasons: Legislation.

Author: Ryer, Andrea
Section: 8(1)(h), 8(1)(g), 67.1, 67.1(1.1)

XXXXXXXXXX
                                                      2015-059963
                                                      A. Ryer

October 30, 2015

Dear XXXXXXXXXX:

Re: Employees’ travel expenses

We are writing in response to your letter, dated March 25, 2015, inquiring about whether certain employees may deduct expenses for meals and rental accommodations from their employment income.

Your letter describes a situation in which employees work as truck drivers for a company engaged in the transport of XXXXXXXXXX to locations within the municipality where the employer’s establishment (i.e., shop) is located. The employees work XXXXXXXXXX hours a day and return each night to their own rental accommodations within the municipality. The employees have permanent homes outside the municipality (often outside the province). They incur expenses for meals and rental accommodations in the municipality where their employer’s shop is located.

Our Comments

This technical interpretation provides general comments about the provisions of the Income Tax Act (Act) and related legislation (where referenced). It does not confirm the income tax treatment of a particular situation involving a specific taxpayer but is intended to assist you in making that determination. The income tax treatment of particular transactions proposed by a specific taxpayer will only be confirmed by this Directorate in the context of an advance income tax ruling request submitted in the manner set out in Information Circular IC70-6R6, Advance Income Tax Rulings and Technical Interpretations.

Generally, deductions in computing employment income are restricted. Pursuant to subsection 8(2) of the Act, no deduction is allowed in computing employment income, except for the expenses specifically listed under section 8 of the Act. The Act does not permit an employee to deduct the cost of his or her accommodations near work, nor does the Act permit a deduction for the cost of meals consumed while working, except where the employee is required by his or her job to travel away from the municipality where he or she normally reports to work.

Meal expenses

Under certain circumstances, truck drivers may deduct the cost of meals under paragraphs 8(1)(g) or (h) of the Act. However, under each paragraph the employee must be required by his or her job to travel away from the municipality (and the metropolitan area, if there is one) where he or she usually reports for work.

Where the Act permits a deduction for meals, the amount that can be deducted is restricted by section 67.1 of the Act to 50% of the cost to the taxpayer to the extent that the amounts are reasonable. In the case of long-haul truck drivers who are away for an eligible travel period, the amount that can be deducted is increased to 80% of the cost to the taxpayer, again to the extent that the amount is reasonable. An eligible travel period for an employee is defined in subsection 67.1(5) of the Act as a period of at least 24 continuous hours in which the employee is required to be away from the municipality (and the metropolitan area, if there is one) where he or she usually reports for work.

Rental accommodations

A truck driver may be able to deduct expenses for lodging or accommodations under paragraph 8(1)(g) or (h) of the Act. However, under either paragraph, the expenses must be incurred while performing his or her employment duties. It is well established that travel expenses incurred by a taxpayer in travelling between his or her home and place of work are considered personal expenses. They are not travelling costs incurred in the course of the taxpayer’s employment duties. Furthermore, neither paragraph permits a deduction for an employee’s housing expenses, including in circumstances where an employee has both accommodations near his or her place of work and a permanent home elsewhere.

The requirements of paragraphs 8(1)(g) and (h) of the Act are discussed in greater detail in Information Circular IC73-21R9, Claims for Meals and Lodging Expenses of Transport Employees, which is available at http://www.cra-arc.gc.ca/menu/ICSC-e.html.

We trust that these comments will be of assistance.

Yours truly,

Nerill Thomas-Wilkinson, CPA, CA
Manager
Business and Employment Income Section
Business and Employment Division
Income Tax Rulings Directorate

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