written on behalf of Feigenbaum Law
There has been a stark increase in individuals who are working from home since the COVID-19 pandemic. While some employers have mandated that employees return to physical offices, others have allowed employees to remain at home, either full-time or in a hybrid model with time split between home and the employer’s office. However, not every job can be performed at home and many people have returned to commuting to and from their workplace.
For years, the law has been clear that expenses incurred during the commute cannot be claimed on personal tax returns. However, the recent decision of Mason v. The Queen from the Tax Court of Canada addressed the issue of whether an employee’s commuting expenses could be properly deducted under the Income Tax Act.
The appellant taxpayer, Mason, was employed as a construction foreman during the 2017 tax year. The employee claimed that he incurred $9,853 in expenses relating to commuting from his home to construction sites, and from worksite to worksite, throughout the course of his employment. The Canada Revenue Agency disallowed $1,642 of these claims, specifically those which were related to commutes from his home to a worksite. The Court referred to section 8 of the Income Tax Act which reads:
“8(1) In computing a taxpayer’s income for a taxation year from an office or employment, there may be deducted such of the following amounts as are wholly applicable to that source or such part of the following amounts as may reasonably be regarded as applicable thereto
Motor vehicle travel expenses
(h.1) where the taxpayer, in the year,
(i) 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
(ii) was 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 travelling in the course of the office or employment, except where the taxpayer
(iii) received an allowance for motor vehicle expenses that was, because of paragraph 6(1)(b), not included in computing the taxpayer’s income for the year, or
(iv) claims a deduction for the year under paragraph 8(1)(f).”
In short, the Act states that employees are not allowed to claim expenses related to travel from home to work. These should be considered personal expenses.
The Court noted that case law has evolved in regard to situations where someone’s home is considered to be an essential place of business for their work and referred to previous decisions. In Campbell v. Minister of National Revenue, an employee who worked from both his home and his employer’s office, was allowed to claim expenses when he was required to travel from home to the office.
In Hoedel v. R, a police officer had charge of a police dog and was required to bring the dog home and bring him out on errands to help socialize the dog. The court in this instance noted that non-compliance with these specific instructions could result in poor performance reviews, therefore the court concluded that necessary commutes such as taking the dog home, and taking the dog to the veterinarian were part of the officer’s job requirements therefore those expenses were deductible. However, the court distinguished that personal errands were not deductible.
Evidence provided during the hearing supported the fact that the employee was required to take his tools home with him each day to ensure safe storage at a designated spot in his garage and perform regular maintenance and necessary repairs to them. The Court also found that part of the employee’s job requirements was to deliver tools, equipment and materials to particular worksites the following morning. The respondent in this case argued that the Court should distinguish this case from Campbell on the basis that the employee did not perform the majority of his job duties in his garage.
The above noted factors, however, were sufficient evidence for the Court to determine that the employee had two places of work and ultimately found that “the motor vehicle expenses incurred by Mr. Mason while travelling from his house to various worksites of his employer and vice versa are properly deductible under paragraph 8(1)(h.1) of the Income Tax Act”.
Justice LaFleur held that the employee was able to deduct additional motor vehicle expenses totalling an amount of $2,131.
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