2016-0627441E5 Employment expenses – long-haul truck driver

Principal Issues: Deductibility of expenses by a long-haul truck driver.

Position: It is a question of fact.

Reasons: See response.

Author: Underhill, Cynthia
Section: SECTION 8(2), 8(1)(g), 8(1)(h), 8(1)(h.1), 8(1)(i)(iii), 8(1)(j), 8(4), 8(10), 67.1(1), 67.1(5), 67.1(1.1), 230(1), 248(1)

XXXXXXXXXX                                                                                                 2016-062744
                                                                                                                         C. Underhill
May 26, 2016

Dear XXXXXXXXXX:

Re:  Employment expenses – long-haul truck driver

We are writing in response to your letter dated December 29, 2015, concerning what expenses a long-haul truck driver may deduct from his or her employment income. More specifically, you asked whether a long-haul truck driver can deduct the cost of supplies, such as maps, pens, paper, and cleaning supplies.

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 IC 70-6R7, Advance Income Tax Rulings and Technical Interpretations.

Where an individual earns employment income (i.e., he or she is an employee) and incurs expenses in the course of performing employment duties, he or she may be entitled to deduct those expenses, provided that certain conditions are met. An employee is limited to the deductions described in section 8 of the Act.

Generally, an employee may deduct the cost of employment-related expenses described in section 8 of the Act if the following conditions are met:

*     Under the contract of employment, the employee has to provide and pay for the expenses;

*     The employee is normally required to work away from the employer’s place of business;

*     The employee does not receive a non-taxable allowance for the expenses;

*     The employer does not or will not repay the employee for the expenses; and

*     The employee keeps with his or her records a completed and signed copy of the appropriate form(s) (i.e., Form T2200, Declaration of Conditions of Employment or Form TL2, Claim for meals and Lodging Expenses).

For more information on these conditions and how to claim employment-related expenses, go to www.cra.gc.ca/employmentexpenses, see chapters 3 and 4 of Guide T4044, Employment Expenses 2015, Information Circular IC73-21R9, Claims for Meals and Lodging Expenses of Transport Employees, Form T2200, and Form TL2.

Generally, an employee who is a long-haul truck driver may claim employment-related expenses such as lodging (including showers), meals, or supplies (e.g., maps, pens, paper, and cleaning supplies) that are used up directly in his or her work, if the required conditions are met. For other employment-related expenses that may be claimed by a long-haul truck driver, see Guide T4044.

It is your understanding that you were denied certain employment expenses that other truck drivers may have been allowed. This could be due to the fact that the other truck drivers meet the required conditions (i.e., their situation differs from yours) or they are self-employed. Generally, a self-employed individual is permitted to deduct a wider variety of expenses under the Act than an employee. The deductibility of an expense is fact specific and can only be determined on a case-by-case basis.

Also, the other truck drivers’ expense claims may not have been subject to a review by the Canada Revenue Agency (CRA). Canada’s tax system is based on self-assessment. This means that individuals voluntarily complete an income tax return to report their annual income and claim all deductions or credits that apply to their situation.

During the initial assessment, income tax returns are processed with a minimum of verification in order to expedite the issuance of a Notice of Assessment. However, in order to maintain public confidence in the integrity of the income tax system, it is the CRA’s responsibility to ensure that all income, deductions, and credits claimed by an individual are accurately reported and substantiated. Therefore, each year the CRA selects a limited number of returns for a routine review to ensure that they have been properly assessed.

We trust 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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