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.
Whether the application of subsection 6(6) would exclude from employment income the value of transportation, and board and lodging, provided to a group of employees seconded for a term of employment from a non-resident parent company to a Canadian subsidiary.
Question of fact, a determination cannot be made for a group of employees as whole. Each individual employee may have varying circumstances.
Subsection 6(6) and IT-91R4
Randy Hewlett, B.Comm.
July 30, 2001
Re: Employment at a Special Work Site
We are writing in response to your letter dated May 14, 2001, wherein you requested our opinion on the application of subsection 6(6) of the Income Tax Act (the Act) to exclude from employment income the value of benefits received in respect of transportation, and board and lodging, provided to a group of employees in the situation summarized below. As well, you seek clarification on the meaning of "temporary" in respect of the duties performed by an employee at that special work site, as that word is used in subparagraph 6(6)(a)(i) of the Act.
The situation involves a Canadian subsidiary and its non-resident parent that carry on similar businesses. The Canadian subsidiary has employees seconded from the parent on a "temporary and rotational basis." These employees have specialized skills and will apply their skills to the business of the Canadian subsidiary, and train its current or new employees hired directly. The secondments will cease as soon as a sufficient number of employees hired directly by the Canadian subsidiary are adequately trained. The families of the seconded employees will not join them in Canada, but will remain in their country of origin and continue to reside in the family home. The Canadian subsidiary will pay for the seconded employee's transportation to and from Canada, and for lodging and meals while in Canada. The seconded employees will not return daily from the special work site in Canada to their homes in their country of origin. The seconded employees will not rent their homes located in their country of origin. The term of the secondment is such that employees will not maintain a home in Canada; however, the period of absence will be greater than 36 hours.
The situation presented appears to be an actual fact situation involving completed or ongoing transactions. 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 offer the following general comments.
Generally, the value of employer-provided board and lodging or transportation to and from the job is included in the employee's income under the rules in subsection 6(1) of the Act. However, by virtue of subsection 6(6) of the Act, an exception is provided in limited circumstances for employment at a special work site or remote work location. Interpretation Bulletin IT-91R4 Employment at Special Work Sites or Remote Work Locations, dated June 17, 1996, provides detailed information on the exclusion under subsection 6(6) of the Act.
Subparagraph 6(6)(a)(i) of the Act provides for an exclusion from an employee's income, for the value of employment benefits received or enjoyed, or a reasonable allowance in respect of, expenses incurred by the employee for board and lodging at a special work site where the duties were of a temporary nature. Paragraphs 5 and 6 of IT-91R4 contain comments on whether employment duties at a special work site will be considered temporary. The term temporary, while not defined in the Act, generally refers to situations where continuous employment is not beyond a period of two years.
The exclusion provided for in subparagraph 6(6)(a)(i) of the Act can only be determined on an individual employee basis. A collective determination cannot be made on a group of employees as a whole, as each individual will have differing circumstances to consider. For example, it will have to be determined whether the term of employment is temporary, and whether the employee's principal place of the residence, at a location other than the special work site, has been maintained.
We trust our comments will be of assistance to you.
John Oulton, CA
Business and Partnerships Division
Income Tax Rulings Directorate
Policy and Legislation Branch
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