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:
Whether a motor vehicle allowance received from an employer would be considered a taxable benefit where the allowance is in respect of the use of a personal motor vehicle for travel from the employee's principal residence to a particular job site of the employer.
Position:
Travelling between the employee's home and the place of employment is personal travel. The allowance is included in the employee's income in the year received.
Reasons:
Paragraph 6(1)(b) of the Income Tax Act.
XXXXXXXXXX 2001-008177
Randy Hewlett
July 9, 2001
Dear XXXXXXXXXX:
Re: Technical Interpretation Request
We are writing in response to your letter dated April 9, 2001, wherein you requested our opinion on whether a motor vehicle allowance you are receiving from your employer would be considered a taxable benefit. The allowance is in respect of the use of a personal motor vehicle for travel from your principal residence to a particular job site of your employer.
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. Where the particular transactions are completed, the inquiry should be addressed to the relevant Tax Services Office. However, we are prepared to provide the following comments.
It has been our long-standing position that travelling between an employee's principal residence and the place of employment is personal travel. Accordingly, an allowance paid by the employer to compensate an employee for such an expense is included in the employee's income in the year received pursuant to paragraph 6(1)(b) of the Income Tax Act (the Act), unless one of the exceptions apply. For example, a reasonable allowance for use of a motor vehicle for travelling in the performance of the duties of the office or employment may be excluded under subparagraph 6(1)(b)(vii.1) of the Act. As noted in paragraph 49 of IT-522R, Vehicle, Travel and Sales Expenses of Employees, dated March 29, 1996, travelling between the employee's home and the place of employment is not considered to be travelling in the performance of the duties of the office or employment.
Another example would include a reasonable allowance for transportation expenses relating to a special work site or remote location, which may be excluded by virtue of paragraph 6(6)(b) of the Act. However, pursuant to specific requirements in the Act the allowance must, among other things, be in respect of a period during which the employee was required to be away from his or her principal place of residence or to be at the special work site or remote work location for a duration of not less than 36 hours, and received board and lodging from his or her employer for that same period of time.
In your letter you specifically ask if the special circumstances in paragraph 9 of Interpretation Bulletin IT-91R4, Employment at Special or Remote Work Locations, dated June 17, 1996, would apply to exclude a motor vehicle allowance from income under subsection 6(6) of the Act. These special circumstances are exceptions to the general rule that the employee's principal residence must be at least 80 kilometres from the special work site for the board and lodging allowance to be excluded from income under this provision. They would be irrelevant to the determination of whether a transportation allowance is excluded from income under subsection 6(6) of the Act, unless the employee otherwise qualifies for the special work site exclusion.
If you have any further questions on your particular situation, please contact the Client Services Division of your local tax services office. We trust our comments will be of assistance to you.
Yours truly,
John Oulton, CA
for Director
Business and Partnerships Division
Income Tax Rulings and Interpretations Directorate
Policy and Legislation Branch
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