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.
Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.
Principal Issues: Canadian students will be working overseas in France for the Canadian Government for about 11 or 12 weeks. The rate of pay is $10.11 per hour plus a daily allowance of $24.00. The daily allowance is being paid to compensate the guides for the high cost of living in France. The issues are whether (i) the allowance is taxable; and (ii) whether a student can deduct their travel costs to and from France.
Position: (i) The allowance is taxable as employment income. (ii) Generally, the student may be entitled to deduct the costs of moving to France - In the case of coming back to Canada, some students may be entitled to deduct moving costs from award income (scholarships, fellowships, bursaries, prizes and research grants) or employment or business income.
Reasons: (i) For the purposes of paragraph 6(1)(b) of the Income Tax Act (the "Act") the allowance is considered to be for "personal or living expenses or as an allowance for any other purpose." (ii) The comments are consistent with those in the General Income Tax and Benefit Guide" and Form T1-M.
July 26, 2000
Charlottetown Tax Services Office HEADQUARTERS
Faye Webster M. Eisner
Business Window (613) 957-2138
2000-3171
Nature of Allowance and Moving Expenses - Students
This is in reply to your facsimile of June 14, 2000, in which you asked us for our comments on a letter you enclosed from Mr. Michael Acker of Veterans Affairs Canada ("Veterans").
Veterans manages a program in which post-secondary students are employed to work as tour guides at the Vimy and Beaumont-Hamel Memorial Parks in France. These students are employed at either location and must assume costs of travel from and to Canada, and the cost of accommodation and meals while in France as well as make provision for health insurance costs. Guides may be hired with respect to the period from March 28 to June 15, 200, June 12, to August 31, 2000, or August 28 to November 30, 2000. The rate of pay is $10.11 per hour plus a daily allowance of $24.00. The $24.00 daily allowance is paid to the tour guides to compensate them for the high cost of living in France. Currently, the living allowance and the salary are included on T4As.
We have been asked whether or not the allowance of $24.00 a day is taxable. In addition, we have been asked whether students can deduct their travel expenses from and back to Canada.
It is our view that that the daily allowance of $24.00 is taxable under paragraph 6(1)(b) of the Income Tax Act (the "Act") as employment income because it is an allowance for "personal or living expenses or as an allowance for any other purpose," for which there is no exemption in the Act.
It is our general view that a student who moved to France to be employed in the manner outlined above, would be entitled to deduct the related travel costs as moving expenses. With respect to the costs of coming back to Canada, a student may be entitled to deduct moving expenses to the extent of the amounts included in income under paragraphs 56(1)(n) or (o) of the Act (scholarships, fellowships, bursaries and research grants). If a student does not have such income, he or she will only be entitled to deduct the travel costs back to Canada in order to start another job or a business. In connection with these comments, reference can be made to page 22 of the "General Income Tax and Benefit Guide" (1999) and Form T1-M.
For your information, a copy of this memorandum will be severed using the Access to Information Act criteria and placed in the legislation Access Database (LAD) on the Agency's mainframe computer. A severed copy will also be distributed to the commercial tax publishers for inclusion in their databases. The severing process will remove all material that is not subject to disclosure including information that could disclose the identity of the taxpayer. Should your client request a copy of this memorandum, they can be provided with the LAD version or they may request a copy severed using the Privacy Act criteria which does not remove client identity. Requests for this latter version should be made by you to Jackie Page at (613) 957-0682. The severed copy will be sent to you for delivery to the client.
John Oulton
Manager
Business, Property & Employment Section III
Business and Publications Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch
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