written on behalf of Feigenbaum Law
One of the most noticeable impacts COVID-19 has had on Canadian workplaces is a movement towards working from home. At the beginning of the pandemic most people who were not deemed essential workers were forced to work from home. Many people are still not back in their offices, and if they are, may only be working from the office on a part-time basis. A recent decision from the Tax Court of Canada highlights a situation that may become more common in 2021, which is the deduction of travel expenses when someone works primarily at home but is required to occasionally travel to an office.
Employee works from home but has to travel to office
The matter arrived before the court after the appellant claimed $12,868 in employment expenses during the 2015 tax year. A reassessment following her tax claim resulted in a denial of the motor vehicle travel expenses she had claimed from driving between her home office in Pickering and her employer’s office in Oakville. The distance between the two locations was 72 kilometers. She claimed the expenses under subparagraph 8(1)(h.1)(ii) of the Income Tax Act which provides that a taxpayer may deduct expenses if they are “required under the contract of employment to pay motor vehicle expenses incurred in the performance of the duties of the office or employment, amounts expended by the taxpayer in the year in respect of motor vehicle expenses incurred for traveling in the course of the office or employment, except where the taxpayer.”
The government stated that her travel was not eligible to be claimed since she was traveling between home and work. However, she took the position that she was traveling between two offices, one of which happened to be at her home.
Was the employee’s home office an office, or a home?
The appellant worked out of the home most of the time. She would travel about twice per week to her employer’s office as well as make occasional trips to visit with customers. Most of her meetings to the office were to have meetings with her boss.
The court referred to a Tax Court decision from 2003 which held that when work circumstances reasonably require that the worker have an office and that the office is not provided by the employer but is located somewhere else (such as a home), and the employee has to occasionally visit an office, then the travel constitutes employment travel and not personal travel.
The court noted that the appellant’s T2200 form states that her employer required her to work at home and that 90% of her work would be done from her home office. She also did not have the appropriate office facilities at the Oakville office location to do her job. As a result, the court found that the appellant did qualify to claim her travel expenses when commuting from her home office to her employer’s office.
Contact Feigenbaum Law for a custom solution to your personal tax planning needs. Our unparalleled knowledge of US and Canadian tax makes us leaders in this field. Contact us about making your transition across the border as smooth as possible. We offer services to clients in the US, Canada and around the world. Contact us to learn more about how we can help or call us at (905) 695-1269 or toll-free at (877) 275-4792.