Q: I am a self-employed consultant and I travel to and from my work via Uber, Lyft or taxi most days. Can I write off the cost of these services as a business expense? If I take my own car, can I write off motor vehicle expenses?
A: The answer depends on whether or not the trips you take can be considered to be a commute. Commutes are considered personal and therefore not deductible, while other forms of travel for business are deductible.
This is a bit of a grey area, but the basic idea is, if your consulting work, despite being self-employment, tends to happen regularly at your client’s place of business, then travel to and from that place is not considered to be deductible.
If on the other hand you normally work at the client’s office but need to make a special trip ‘out in the field,’ either as the nature of your work (e.g., being called into various changing locations to trouble-shoot) or as an occasional thing (e.g., being sent off for a convention or special event), then you can write off the transportation costs to get there.
José is an IT consultant primarily working for a single client, ABC Corp. ABC Corp. provides a workstation for him and most days he works there. However there are some days when he needs to visit some of their field offices to do some hands-on work.
On days when he works at his workstation, he can’t write off the costs of travelling between his home and ABC Corp’s offices – any motor vehicle expenses, taxi or Uber charges he incurs are considered commuting expenses and are non-deductible.
However on days when he travels to the field offices to work on equipment, he can write off any unreimbursed costs of travel.
Alternatively, if your self-employment does not normally happen at your client’s place of business, then you can write off the costs of travelling to that place of business. For example, if you normally work from a home office and only occasionally have to travel to your client’s office for a meeting, you can write off the cost of travelling to the office.
Katrina is a public relations writer who typically works from her home office. One of her clients calls her in to take part in a meeting at the head office regarding the future direction of the client’s marketing and branding. She can write off the motor vehicle, Uber, or other costs of getting to that meeting, even though it’s at her client’s place of business, because she doesn’t normally work there.
The travel vs commute distinction may seem a bit illogical. After all, if you’re self-employed it follows that the cost of going somewhere for the purpose of earning income that you wouldn’t otherwise go should be a tax deduction. Disallowing the cost of your commute doesn’t make sense.
However, the basis of the rule is actually fairness. Canada Revenue Agency (CRA) always wants to stamp out inherent inequalities between salaried people and self-employed people doing a similar job. Since salaried employees often spend a lot of money commuting to and from their jobs but can’t write off those costs, self-employed people can’t either.
Learn more about business deductions for self-employed people:
Self-employed people can benefit from special tax deductions
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