Hamilton – Tax Court of Canada finds that an overtime meal allowance qualified under s. 6(1)(b)(vii), but that a nearby location could not be used as a proxy under s. 6(6)(b)(i)

The taxpayer, when working at a remote site for his employer (e.g., providing repair services at a pulp and paper mill) was given a choice of either a living-out allowance of $135.00 daily or a daily meal allowance of $62.50 together with a room (the taxpayer chose the former), and was also provided with an additional overtime meal allowance of $40 which was paid to an employee once he had completed 10 hours of work that day while at the work site.

Campbell J found that the overtime allowance qualified as an exempt “travel” allowance under s. 6(1)(b)(vii), notwithstanding that it was paid regardless of whether an employee was travelling and working remotely, given that in the taxpayer’s circumstances, it in fact was paid in the performance of his employment duties while travelling away from the municipality where he would ordinarily work and away from the employer’s work establishment, and given evidence that the food and room costs in the remote locations were quite high.

The employer also provided the taxpayer with a per‑kilometer allowance based on the distance between a predetermined location (the city hall for Burnaby, where employees such as the taxpayer were based) and the remote work site. In finding that this travel allowance respecting the remote work location could not be excluded from taxable income under s. 6(6)(b)(i), Campbell J stated:

I cannot extend the term “principal place of residence” [in s. 6(6)(b)(i)] to include a pick-up point that is designated by the employer and from which all employees depart. The provision is clear in its intent.

Maybe not so clear. It might be acceptable to base a travel allowance under s. 6(6)(b)(i) based on an approximation or estimate of the number of kilometres between the employee’s principal residence and the remote work site. If so, it is not clear that it should make any difference to base the allowance on a precise measure of the distance between the work site and a location that approximates that of the principal residence.

Neal Armstrong. Summaries of Hamilton v. The Queen, 2020 TCC 23 under s. 6(1)(b)(vii) and s. 6(6)(b)(i).