These are amounts that the CRA accepts as reasonable allowances that may be paid by employers.” In conclusion, the judge said, given a lack of any receipts, this was “not a case in which the Court should bend over backwards to help a taxpayer who is not able to prove his case.” He’d given the receipts to his tax preparer, who was “nowhere to be found.” Showers attempted to argue that he should at least be allowed to claim expenses up to the CRA-approved allowance rates in effect for 20.īut the judge didn’t buy that argument, saying, “The allowance policy does not reflect actual expenses in a particular case and is not meant to. In 2008, he underreported his reimbursement and, in 2009, he neglected to report any of the amounts he was reimbursed.Īnother issue with the taxpayer’s claim was that “most of the items claimed as motor vehicle expenses appear to be unreasonably high.” Yet, despite acknowledging that the amounts claimed were wrong, Showers could produce neither the correct amounts, nor any reasonable estimates. Showers’ employer had reimbursed him $0.38 per kilometre, but the taxpayer failed to fully include these reimbursements in his income for the years in question. This, in turn, posed an additional problem. He also acknowledged the kilometres driven for employment purposes recorded on Form T777, Statement of Employment Expenses, were inaccurate and the correct number of kilometers was the one reported to his employer for purposes of being reimbursed. While Showers agreed the amounts claimed were excessive, he blamed his tax preparer, adding he’d never actually reviewed his tax returns before signing and submitting them. The issue that CRA, as well as the Tax Court judge, had with these expenses was that the amounts claimed appeared excessive and lacked “sufficient reliable evidence” to allow CRA and the Court to estimate the proper expenses. If, however, an employee determines that the allowance her employer pays, although reasonable, doesn’t cover the actual costs of operating the vehicle, the employee can choose to deduct the business portion of her actual operating expenses as long as she includes any allowance received from her employer as income. For the years in question, 20, the limit was 52 cents for the first 5,000 km, and 46 cents thereafter. As long as this allowance is considered reasonable, it does not have to be included in income and, thus, is tax-free.įor 2014, CRA defines “reasonable” as 54 cents per kilometre for the first 5,000 kilometres and 48 cents thereafter (higher for the territories). Yet many employees who otherwise might be eligible to claim their motor vehicle expenses choose not to if their employers provide them with per-kilometre reimbursements. Under the Income Tax Act, if an employee uses his vehicle for work, he can deduct the business portion of the operating expenses from income when he files his tax return. On his 20 tax returns, he claimed motor vehicle expenses for his pickup truck, amounting to nearly $6,200 and $9,800 respectively, along with GST rebates. The taxpayer, Showers, is a cabinet installer and worked for a kitchen company.
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