In Brochu v. The Queen, 2010 TCC 274, the Tax Court of Canada addressed the basis on which employees are allowed, under the Income Tax Act, to deduct their car expenses to the extent that they relate to the person's work.

Background

Under his collective agreement, Mr. Brochu, a heavy equipment operator, received:

• a $20/week car allowance during the weeks in which he was stationed, beginning Monday and ending on Friday, at a remote "winter" logging camp; and
• a $8/day car allowance during the weeks in which he drove daily to either
  the employer's "depot" (a garage/office), or to a marshalling point to catch a work shuttle to a "commuter" logging camp.

Mr. Brochu took the position that given he was given an unusually low car allowance by his employer, he should be able to deduct his actual car expenses from his income tax, to the extent that they exceeded the travel allowance.  The Canada Revenue Agency disagreed.

Court's Decision

The court noted that, "The general rule is that neither employees nor self‑employed persons are entitled to deduct their motor vehicle expenses associated with getting to and from work. The exceptions are limited and specific" (para. 8).

The court went on to state that the only deduction potentially available to Mr. Brochu would be under paragraphs 8(1)(h.1) and 8(10) of the Income Tax Act, which have the following mandatory requirements:

1. the employee must be required by the terms of his employment to travel to work somewhere other than his employer's place of business or in different places.
2. the employee must be required to bear those travel expenses.
3. the employer must certify on the T2200 form that the first two requirements are met.

In finding that Mr. Brochu did not meet these requirements, and that his appeal of his income tax re-assessment should be dismissed, the court noted:

• The winter camp, the commuter camps and the depot were all clearly a "place of business" for the employer.
• Mr. Brochu only very rarely drove his car for any other work related purpose than getting to and from his work each day or, during the winter, each week.
• The employer refused to provide a duly completed and signed T2200 form, and this refusal was not unreasonable. Rather, the employer testified that it did not complete and sign the form because it did not believe Mr. Brochu met the requirements and because the employer had previously obtained a written opinion from the CRA that it did not believe employees of qualified in these circumstances.