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Be careful how you make your expense claims

May 28, 2013 at 2:38 PM

                      INPUT TAX CREDITS (ITCs) - TRAVEL ALLOWANCES

In a January 17, 2013 Tax Court of Canada case, ITCs of $126,339 were claimed with regards to travel allowances paid to employed sales representatives for the estimated number of kilometers driven.

Taxpayer loses

The Tax Court noted that:

1.   The allowances paid were based on an estimate of the kilometres to be travelled and not on the actual kilometres driven for business.

2.   The Excise Tax Act (ETA) permits ITCs related to non-taxable allowances, however, the allowance must be based on the actual number of kilometres driven.

3.   The requirements were not met, and the ITCs were not allowed.