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  ->  Employment Expenses  -> Employee Motor Vehicle Travel Expenses

Employee Motor Vehicle Travel Expenses

Income Tax Act s. 8(1)(h.1), s. 8(1)(j)

This is also discussed on the Business page under the topic Automobile (passenger vehicle) / motor vehicle expenses - Employees.

See also:

What expenses are included as motor vehicle expenses on the Business page, as well as the article on Trip logs.

Tax-free motor vehicle allowances

Motor vehicle expenses may be deducted by an employee on Line 22900 (line 229 prior to 2019) of their tax return if the employee:

bulletwas normally required to carry on the duties of employment away from the employer's place of business, or in different places, and
bulletwas required under the contract of employment to pay motor vehicle expenses incurred in the performance of the duties of employment, and
bulletdid not receive any allowance or reimbursement from the employer for motor vehicle expenses.  

Form T2200, Declaration of Conditions of Employment, must be completed by the employer in order for the employee to claim these expenses.

The employee claims the expenses on Form T777 Statement of Employment Expenses.

In order to deduct vehicle expenses on Form T777, the employee must

bullettrack their vehicle expenses for the entire year, and
bullet track their kilometres related to use of the vehicle for earning employment income, by use of a trip log.

This is the only method allowed for an employee to claim vehicle expenses - they cannot simply use a rate per kilometre x kilometres driven for work.

Travel to and from the place of work is not considered use for employment.  When the form is completed, the kilometres used for earning employment income is entered, as well as the total kilometres driven in the year.

The motor vehicle expenses will include any GST/HST or provincial sales taxes incurred.  You may be eligible for a refund of the GST/HST included in the costs.  See Employee and Partner GST/HST rebate on the GST/HST page.

Line 22900 employment expenses can be entered in the "other deductions" line of the Canadian Tax and RRSP Savings Calculator.

This topic is discussed in the Life in the Tax Lane October 2019 video, referencing Tax Court case MacDonald v. The Queen, 2019 TCC 169.

Working From Home Travel Expenses

If an employee normally works in their home office, does not have an office at the employer's place of business but occasionally must travel there, the travel to and from the employer's place of business may qualify for a vehicle expense deduction, or may receive a tax-free reasonable travel allowance from their employer for this travel.

Working from Home during COVID

Tax Court of Canada case Gardner v. The Queen 2020 TCC 108 decided the expenses claimed by the taxpayer for travel between her home office and her employer's office in 2015 were deductible as an employment expense as per s. 8(1)(h.1)(ii) of the Income Tax Act.  The T2200 form completed by her employer stated that her employment contract required her to use a portion of her home from work, and that 90% of her duties of employment were performed in her home office.  She did not have an office at the employer's place of business, and said that the travel was employment travel because it was between two places of her employment, one being her home office.  The Court agreed.

In Tax Court case Campbell v. The Queen 2003 TCC 160, a group of appellants who held office with a school board, and worked from home, were successful in arguing that the travel allowances they received for travel between their home offices and the school board offices were not taxable.  The appellants' home offices were their regular places of work, and they did not maintain offices at the school board building.  For these reasons, the Court was satisfied that the travel between the home offices and the school board building to attend meetings was not personal travel, and ruled that the expenses were exempt from taxation under the provisions of s. 6(1)(b)(vii.1) of the Income Tax Act.

TaxTips.ca Resources

Employee Tax Topics on our Personal Income Tax page

Capital Cost Allowance (CCA) - Zero-Emission Vehicles

Canada Revenue Agency (CRA) Resources

Line 22900 Other Employment Expenses

T4044 Employment Expenses, including Enhanced CCA on Zero-Emission Vehicles

IT-522R Vehicle, Travel and Sales Expenses of Employees (Archived)

Tax Tips:

A reasonable per-kilometre allowance is tax-free, and is the easiest method for an employee to recover vehicle expenses.

Employees deducting vehicle expenses on their tax return must track vehicle kilometres and vehicle expenses for the entire year.

Revised: July 27, 2021

 

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