Tax deductions usually a matter of definition

I came across an income tax case the other day. It’s related to the topic I raised last week (personal vehicle for business travel). All accountants know that driving to and from work is NOT tax deductible. Here’s the story:

An employee of a company worked out of their personal home office. During that time they also drove too and from the employer’s office. The employer paid the employee for the travel and the employee did not report the income on their taxes. Even though the employee mostly worked from their home office, the judge sided with CRA that the amounts received from the employer was taxable. One of the critical points in the case was that the employer had an office available for the employee at the employer’s location. The choice to have an office at home “…was entirely the taxpayer’s decision… and the decision was based on convenience.” McCreath v. Canada (2008) T.C.J. No 454, T.C.C., Campbell J., Oct.30/08. Digest No. 2833-025
Something of importance should be noted. The tax courts determine business travel and also home office expense (not specifically discussed in this case) in light of “base of operations”.
If a person is self-employed the base of operation is clearly the home office (practically or so documented). Under incorporation the base of operation is clearly the head office (practically or so documented). Therefore an employee driving to and from the place of employment is not an issue unless documentation implies otherwise.

Therefore when a driver logs his/her personal vehicle as “went to work” there may be an implied problem with the definition of “base of operations”. However, if the log reads “went to move equipment” or “delivered paperwork to customer” the definition of “base of operations” is not compromised.

Though this case isn’t an exact replica of the concept it does enforce the courts understanding of tax deductibility.