Jamie Golombek: To deduct unreimbursed meals and lodging employment bills, a number of circumstances should be met
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Some taxpayers attempt to write off the price of attending to work as a deductible expense for tax functions. However apart from the odd distinctive case, these bills are denied for the reason that Canada Income Company usually considers the price of driving backwards and forwards between house and work as a non-deductible private expense.
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However what if you happen to determine to remain at a resort close to your employer’s workplace through the workweek to reduce your each day commute? Are you able to write off the price of your lodging, together with the price of meals whereas residing close to your work? Nicely, you may definitely strive. One Ontario taxpayer did and nearly obtained away with it, till the CRA challenged the taxpayer’s employment bills and the matter ended up in Tax Courtroom.
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The current case concerned a commuter prepare operator for GO Transit, the regional public transit service for the Higher Toronto and Hamilton Space. The job required him to work from numerous prepare stations throughout Ontario. The taxpayer usually resided in Prince Edward County, and the corporate’s house terminal was Toronto’s Union Station.
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The taxpayer reported taxable revenue of $130,640 in 2014 and $110,729 in 2015, and claimed employment bills on his tax return of $17,604 and $20,408, respectively. The employment bills consisted largely of lodging bills (about $11,000 in 2014 and $14,700 in 2015), and meals (almost $6,000 in 2014 and $5,700 in 2015).
The CRA initially assessed his tax returns for 2014 and 2015 as filed, however the company subsequently reassessed the taxpayer in 2016 and denied all his employment bills for each years.
The taxpayer defined he was required as a commuter prepare operator to work from numerous prepare stations forming a part of the GO Transit community. On the trial, the taxpayer testified that in a normal working week, he would depart his house in Prince Edward County on Sunday afternoon and head by automobile to Oshawa, returning house solely on Friday evenings after his week’s ultimate shift was over. The driving distance between his house and Oshawa is roughly 160 kilometres, representing a driving time of just about two hours.
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The taxpayer additional defined that he normally began and completed work on the Oshawa GO prepare station and never at his employer’s house terminal positioned in Toronto. Whereas away from house, he typically stayed at a resort near the Oshawa GO station or in Pickering, the place he rented an residence close to its GO station for a interval of six or seven months in 2014, at a price of $9,500. He rented a unique Pickering residence in 2015 at a price of $5,520, and commuted from there to the Oshawa GO station the place he labored.
There’s a particular rule within the Revenue Tax Act that enables transportation staff who’re recurrently required to be away from their house municipality to deduct unreimbursed meals and lodging employment bills. To be entitled to deduct these bills, a number of circumstances should be met.
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First, the employer’s principal enterprise should be transporting passengers, items or a mix of each. The taxpayer can be required to recurrently journey away from the municipality the place the employer’s institution is positioned (that’s, the place the taxpayer reported to work). As well as, the taxpayer should journey on autos utilized by the employer to move these items or passengers. Lastly, the taxpayer should be required by their duties of employment to pay for meals and lodging whereas away from their house municipality.
The worker on this case had a correctly accomplished and signed Canada Income Company Type T2200, Declaration of Circumstances of Employment, on which his employer licensed he was required to pay numerous varieties of bills for which he wouldn’t be reimbursed. Beneath the “Circumstances of employment” part, his employer acknowledged he was required to journey to areas that weren’t his workplace whereas performing his employment duties.
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The shape additionally famous that the employer required the worker to be away for 12 consecutive hours from the municipality and the metropolitan space the place he routinely reported for work. His employer acknowledged on the T2200 type that it doesn’t reimburse employment bills incurred by its staff.
The worker additionally accomplished and filed signed copies of the particular type for transit staff, Type TL2, Claims for meals and lodging bills, which the taxpayer hooked up to his 2014 and 2015 tax returns.
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Throughout his testimony, the taxpayer testified his each day work shift was greater than 12 hours per day, and he gave details about particular routes to indicate that. However when cross-examined about his each day work shift, the taxpayer acknowledged “that lots of his routes lasted lower than 12 hours and had been topic to separate shifts with interruption instances.”
Based mostly on the proof, the choose mentioned the taxpayer had not established that his duties of employment required him to recurrently journey away from Oshawa, and away from the metropolitan space the place his employer was positioned, thus necessitating him to incur bills for meals and lodging. The choose famous that Oshawa is within the Durham Area, which is within the Higher Toronto Space. The taxpayer, subsequently, was not capable of set up that the employment bills he claimed had been incurred exterior the metropolitan space the place he reported to work.
“The deductions … (are) not meant for workers who determine, for private causes, to not return to their houses on the finish of every working day,” the choose concluded.
Jamie Golombek, CPA, CA, CFP, CLU, TEP, is the managing director, Tax & Property Planning with CIBC Personal Wealth in Toronto. Jamie.Golombek@cibc.com.
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