In 2016, the Canada Revenue Agency reassessed taxpayer and disallowed the motor vehicle expenses she claimed for the 2015 tax year. When she filed her 2015 income tax return, she had claimed $12,868 in motor vehicle expenses under section 8(1)(h.1) of the Income Tax Act.
At the time, she was employed by Canadian's Corporation, with an office in Oakville, but she primarily worked from her home office and only visited the company's office occasionally.
To support her claim for motor vehicle expenses, her employer, Canadian's Corporation, completed a Form T2200 "Declaration of Conditions of Employment" as required by section 8(10) of the Tax Act, indicating that she was required to perform 90% of her work duties from her home office and had no access to a company vehicle.
The taxpayer used her personal vehicle to travel to the company's office 72 kilometers away for weekly meetings with supervisors and co-workers, but she did not have her own office there and did not work there on a regular basis.
The taxpayer filed an appeal to the Tax Court of Canada to challenge the disallowance of her claimed motor vehicle expenses. She argued that her employment duties required her to work from her home office and that any travel between her home office and the Employer's office was considered travel between two places of employment. However, the Crown countered that the taxpayer was traveling from her home, not her home office, to the Employer's office and therefore could not deduct the motor vehicle expenses for the 2015 tax year. There was no disagreement between the parties regarding the amount of expenses claimed for motor vehicle expenses.
The central issue in the appeal was whether the travel between the taxpayer's home and the Employer's office was personal or for employment purposes. According to the Income Tax Act, under subparagraph 8(1)(h.1)(ii), motor vehicle expenses can only be deducted if they are incurred during the course of employment. If the travel was considered personal, the expenses would not be deductible, but if it was considered employment-related, the expenses would be deductible. If the expenses were allowed, the taxpayer would be able to claim the motor vehicle expenses on her 2015 tax returns.
The Tax Court ruled in favor of the taxpayer, determining that the travel between her home office and the Employer's office was incurred during the course of her employment. This decision was based on the fact that the taxpayer was traveling between two locations related to her employment.
The Tax Court ruled that the travel by the taxpayer between her home office and her employer's office was considered employment travel and allowed the claimed motor vehicle expenses.
In this case, it was established that no office was provided to the taxpayer by her employer, making it a requirement of her job to work from her home office and commute between her home office and the employer's office for meetings.
Tax Tip. The taxpayer's appeal to the Tax Court of Canada to allow her motor vehicle expenses was successful because she was traveling between two employment-related locations and was required to work from her home office, as her employer did not have an office for her.
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