26 August 2008 External T.I. 2008-0273351E5 - Employee Travel Allowances

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.

Principal Issues: Are the per diem amounts and the per-kilometre mileage allowances received by the members of the XXXXXXXXXX committee taxable?

Position: Per diems are taxable as income from an office. The taxability of the mileage allowance must be determined on a case-by-case basis.

Reasons: The law.

XXXXXXXXXX 								2008-027335
									Michael Cooke
August 26, 2008

Dear XXXXXXXXXX :

Re: Taxability of per diem amounts and mileage allowances paid to committee members

We are writing in response to your correspondence of April 8, 2008, requesting a technical interpretation on the above-noted issue, as it pertains to members of the XXXXXXXXXX (the "Committee"). XXXXXXXXXX We also acknowledge the additional information provided in your telephone conversation with Michael Cooke on August 14, 2008 XXXXXXXXXX

Our understanding of the facts is summarized as follows:

XXXXXXXXXX

The committee members XXXXXXXXXX are generally appointed for XXXXXXXXXX year terms. Among other requirements, every member must agree to attend regular meetings XXXXXXXXXX . We understand that XXXXXXXXXX , a committee must have at least one meeting each month until its proposed terms of reference are submitted XXXXXXXXXX .

XXXXXXXXXX Because the Committee represents a large territory, its members come from a wide geographic area XXXXXXXXXX . We also understand that approximately half of the meetings of the Committee will be held at one central location (XXXXXXXXXX ) but other meetings may be held at various locations throughout the XXXXXXXXXX Region.

Members of the Committee are generally paid a per diem amount of $XXXXXXXXXX for attending each Committee meeting and a per-kilometre mileage allowance of $XXXXXXXXXX to cover automobile travel expenses. XXXXXXXXXX

You ask if the per diem amounts and the automobile allowances paid XXXXXXXXXX to members of the Committee are taxable.

Our Comments

Written confirmation of the tax implications inherent in particular transactions is given by this Directorate only where the transactions are proposed and are the subject matter of an advance income tax ruling request submitted in the manner set out in Information Circular 70-6R5, Advance Income Tax Rulings, dated May 17, 2002. Where the particular transactions are completed, the inquiry should be addressed to the relevant Tax Services Office. However, we are prepared to offer the following comments.

Per Diem Amounts

Subsection 5(1) of the Income Tax Act (the "Act") states that "... a taxpayer's income for a taxation year from an office or employment is the salary, wages and other remuneration, including gratuities, received by the taxpayer in the year." The terms "salary", "wages" and "other remuneration" are not defined for purposes of section 5 of the Act and therefore must be given their ordinary meaning.

The term "office" is defined in subsection 248(1) of the Act, and "means the position of an individual entitling the individual to a fixed or ascertainable stipend or remuneration, and includes a judicial office, the office of a minister of the Crown, the office of a member of the Senate or House of Commons of Canada, a member of a legislative assembly or a member of a legislative or executive council and any other office, the incumbent of which is elected by popular vote or is elected or appointed in a representative capacity and also includes the position of a corporation director, and "officer" means a person holding such an office" [emphasis added].

The definition of "employee" in subsection 248(1) of the Act includes an officer. By virtue of paragraph 6(1)(c) of the Act, director's or other fees are also classified as income from an office or employment and are required to be included in a taxpayer's income from an office or employment.

Therefore, the per diem amounts paid to a member of the Committee would be required to be included in his or her income as income from an office or employment. Such amounts would accordingly be subject to normal tax withholdings and should be reported on a T4 information slip.

Mileage Allowances

Paragraph 6(1)(b) of the Act requires that a taxpayer include in employment income all amounts received by virtue of an office or employment as an allowance for personal or living expenses. There are exceptions to this general rule, such as subparagraph 6(1)(b)(vii.1) of the Act, which exempts a reasonable allowance for the use of a motor vehicle received in respect of travelling in the course of performing the duties of an office or employment [emphasis added].

While the particular motor vehicle allowance described above appears to be based solely on a per kilometre basis, such that subparagraph 6(1)(b)(x) of the Act would not deem such an allowance to be unreasonable for the purposes of subparagraph 6(1)(b)(vii.1), it remains a question of fact as to whether such an allowance would be taxable.

In particular, it is the Canada Revenue Agency's long-standing position that travel between an officer/employee's home and his or her regular place of office/employment is personal travel. In the context of an individual's appointment as a member on the Committee, in our view the places where such meetings are held will be considered to be regular places of employment. As such, subject to our comments below regarding subsection 81(3.1) of the Act, the mileage allowance received by a Committee member to attend a Committee meeting must be included in income. Subsection 81(3.1) of the Act excludes from income certain amounts that would otherwise be considered income from office or employment. Specifically, subsection 81(3.1) excludes a reasonable allowance or reimbursement of expenses for the personal travel received by a part-time employee from an arm's length employer where the particular part-time employee also had other employment or was carrying on a business throughout the period in which the travel expenses were incurred. In order for this exception to apply, the particular individual's part-time employment duties must be performed at a location not less than 80 kilometres from both that individual's ordinary place of residence and the other place of employment or place business. Depending upon the facts applicable to the particular Committee member, this provision may have application.

We trust our comments will be of assistance to you.

Renée Shields
for Director
Business and Partnerships Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch