One of the most common questions I receive from physicians is whether travel between home and the hospital or clinic should be considered a practice-related trip. At first glance, many assume this is simply “commuting”—a personal trip that cannot be deducted. But the Canada Revenue Agency (CRA) has directly addressed this question in the appendix to its former Interpretation Bulletin IT-521R, using the example of an anaesthetist named Dr. Lethe.
A Note on Archived Bulletins
It is important to point out that IT-521R is now listed by CRA as “Archived.” This means it is no longer being updated and should not be treated as binding policy. However, CRA’s archived bulletins remain highly instructive. They reflect how the agency has historically interpreted provisions of the Income Tax Act and Regulations, and unless the law has changed materially, the reasoning continues to provide valuable insight for taxpayers and advisors.
For physicians, the Dr. Lethe example continues to illustrate the key principle: whether a trip is practice-related or personal depends on the base of your operations, not just the physical distance travelled.
The Case of Dr. Lethe
In CRA’s example, Dr. Lethe was a self-employed anaesthetist:
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Home as base of operations: Her home office served as her headquarters, where she managed billing, recordkeeping, and correspondence. She had no office space at the hospital.
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Hospital role: The individuals she treated were patients of the hospital, not her own patients.
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Driving pattern: She frequently travelled between her home and the hospital.
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Mileage split: About 20% of her total kilometres were attributable to these trips.
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CRA observation: About 70% of the time her vehicle was away from home, it was either being driven to or parked at the hospital while she was on duty.
CRA concluded that because her home was the centre of her practice, her trips between home and the hospital were practice-related, not personal commuting.
Why the “Centre of Practice” Question Matters
The classification of your home as the centre of your practice is not just a technicality — it directly affects the percentage of driving that qualifies as practice-related.
If your home counts as your base of practice, then trips from home to hospitals or clinics are treated as practice-related.
That increases the percentage of kilometres classified as practice-related when calculating your vehicle-use ratio.
The higher this percentage, the greater the prorated share of your total vehicle expenses (fuel, insurance, maintenance, interest, and capital cost allowance) that can be deducted against your practice income.
In Dr. Lethe’s case, treating her home as the practice base meant that her home-to-hospital trips increased her practice-related driving percentage — and therefore boosted the deductible portion of her vehicle expenses.
When the Same Reasoning Would Not Apply
Physicians should not assume that all home-to-hospital trips are practice-related. Where the facts show a true office exists elsewhere, CRA will likely consider home-to-office travel to be personal commuting. For example:
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Dedicated office at the hospital or clinic: You hold a lease in your own name (or your MPC’s name) for an office at the facility.
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On-site administration: Billing, records, and correspondence are managed there, not at home.
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Support staff at the clinic or hospital office: Secretaries, nurses, or billing clerks, employed by your practice, work out of that on-site office.
In these cases, the hospital or clinic office is the centre of the practice, not the home.
Multiple Sources of Income — Each Must Be Evaluated
Many physicians today earn income from more than one source, such as:
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Hospital contracts (e.g., anaesthesia, ER coverage, or call services).
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Locum shifts at clinics or other hospitals.
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A private office practice.
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Academic or research appointments.
Each source of income must be evaluated separately:
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For a hospital contract administered from home, trips from home to the hospital may be practice-related.
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For a leased private office practice, trips from home to that office are usually personal commuting.
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For locum shifts, travel may qualify as practice-related if your base remains at home and you provide services at temporary sites.
The key takeaway is that classification depends on where the centre of operations is located for each stream of income.
Practical Takeaways for Physicians
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Identify your base of operations for each income stream: Trips may or may not be practice-related depending on where each practice activity is administered.
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Understand why it matters: Establishing your home as the centre of practice increases the percentage of practice-related trips, which directly increases the share of vehicle expenses that can be deducted.
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Keep a logbook: Track kilometres, destinations, and purposes to support which trips are practice-related.
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Consider both distance and time: CRA has recognized that for hospital-based physicians, a combined method (distance plus time) may better reflect practice-related use.
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Archived, but useful: IT-521R is archived, but its analysis continues to guide how CRA approaches the classification of trips.
Conclusion
The CRA’s archived bulletin IT-521R — and the case of Dr. Lethe contained therein — remains instructive for physicians. It demonstrates that when your home is the centre of your practice, even if the patients you serve are technically patients of the hospital, trips to and from the hospital can be classified as practice-related trips rather than personal commuting.
Why does this matter? Because treating those trips as practice-related increases the proportion of kilometres driven for your practice, which directly increases the share of vehicle expenses that may be deducted.
Physicians with multiple income sources must evaluate each stream individually to determine where the centre of practice lies. With accurate records and careful analysis, physicians can apply these rules consistently and maximize their legitimate deductions.
Disclaimer: This post is for informational purposes only and should not be relied upon as tax or legal advice. Physicians should seek professional guidance before applying these rules to their own circumstances.
Last reviewed: September 2025
