Mason v. The Queen, 2022 TCC 65

August 10, 2022

In a recent decision in Mason v. The Queen, the Honourable Justice Dominique Lafleur of the Tax Court of Canada held that motor vehicle expenses that a construction foreman incurred driving to and from his home and his employer’s worksites were deductible under section 8(1)(h.1) of the Income Tax Act, R.S.C., 1985, c. 1 (5th Supp.) (the “ITA”).

Mr. Mason was employed as a construction foreman for a contractor in British Columbia. On his 2017 tax return, he claimed that motor vehicle expenses that he incurred driving his personal vehicle to and from worksites were deductible “motor vehicle travel expenses” under section 8(1)(h.1) of the ITA. Section 8(1)(h.1) permits a deduction from income where an employee is “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 where motor vehicle expenses are incurred “in the performance of the duties of the office or employment”.[1] The general rule is that the s. 8(1)(h.1) deduction does not apply when employees travel to and from their home and their place of work. Expenses incurred while commuting to and from work are generally considered to be “personal expenses”, as they are not incurred in the course of the employee’s duties, and not deductible under s. 8(1)(h.1).

In assessing Mr. Mason’s 2017 tax return, the Minister of National Revenue disallowed the portion of Mr. Mason’s motor vehicle expenses deduction that was incurred driving to and from worksites, on the basis that this constituted a personal expense. Mr. Mason commenced an appeal from the MNR’s reassessment. The appeal was heard by Lafleur J., and the only issue was whether or not $1,642 incurred by Mr. Mason while travelling to and from worksites was deductible under s. 8(1)(h.1).

Lafleur J. allowed Mr. Mason’s appeal and held that the $1,642 constituted motor vehicle travel expenses that were deductible under s. 8(1)(h.1), rather than personal expenses. The determinative factor was Mr. Mason was required to bring employer-owned tools, equipment, and materials home with him in his vehicle at the end of the work day, clean and repair them in the evening, and store them for safekeeping in his garage at night. Lafleur J. therefore found that Mr. Mason was ordinarily required to “carry on his employment duties in different places”, namely his garage in addition to his employer’s worksites. The motor vehicle expenses that he incurred driving his employer’s tools, equipment, and materials to and from his house and worksites were therefore “incurred for travelling in the course of his employment”. As a result, these amounts were properly deductible under s. 8(1)(h.1).

[1] There are further limitations on the application of the deduction in s. 8(1)(h.1), including that the deduction cannot be claimed where an employee has received a tax-deductible allowance for travel expenses or where an employee claims a deduction under 8(1)(e), 8(1)(f) or 8(1)(g)) of the ITA, but these matters were not at issue in Mr. Mason’s case.

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