24 August 2001 External T.I. 2001-0086275 - EMPLOYMENT AT A REMOTE WORK LOCATION

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 transportation and board & lodging allowances received from an employer for employment at a special work site or remote work location is taxable when the employee chooses to return daily to the principal place of residence.

Position:

Yes.

Reasons:

The allowance is included in the employee's income in the year received by virtue of paragraph 6(1)(b) of the Act. The exclusion for remote work locations under subsection 6(6) of the Act does not apply because the employee is not required by his or her duties to be away from the principal place of residence, or at the special work site or remote work location, for a period of not less than 36 hours. Further, the board and lodging allowance would also not qualify because it was not received in respect of expenses incurred by the employee for board and lodging at the special work site or remote work location.

XXXXXXXXXX 	2001-008627
		Randy Hewlett, B.Comm.
August 24, 2001

Dear XXXXXXXXXX:

Re: Technical Interpretation Request - Employment at a Remote Work Location

We are writing in response to your letter dated May 25, 2001, wherein you requested our opinion on whether allowances an employee receives in respect of employment at a remote work location are excluded from employment income in a hypothetical situation we summarize below.

Facts

1. Aville is a location, which by virtue of its remoteness from any established community meets the description of a remote work location in subparagraph 6(6)(a)(ii) of the Income Tax Act (the Act).

2. Mr. B. is employed at a location in Aville and maintains a self-contained domestic establishment in a Bville, a community greater than 80 kilometers from Aville.

Mr. B works 8-10 hours a day in Aville from Monday to Friday of each week.

3. Mr. B's employer pays Mr. B a reasonable allowance for board and lodging to stay in Aville during the workweek, as well as a reasonable allowance with respect to one trip per week from Mr. B's home in Bville to Aville.

4. Mr B. chooses not to reside in Aville during the workweek, but drives daily to Aville from his home in Bville.

You inquire whether subsection 6(6) of the Act would apply to exclude the allowances from Mr. B's employment income.

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 IC 706R4, Advanced Income Tax Rulings, dated January 29, 2001. 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.

Pursuant to specific requirements in subsection 6(6) of the Act, the allowances described above must, among other things, be in respect of a period during which the employee was required by the duties of employment 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. It is our view that where an employee receives such allowances, and chooses to commute daily from his or her principal place of residence to the special work site or remote work location, he or she would not meet this requirement. Further, the allowance for board and lodging would also not qualify because it must be in respect of expenses incurred by the employee for board and lodging at the special work site or remote work location. The increased travel cost for the daily commute to work would not constitute board and lodging expenses. Without a specific provision of the Act that indicates otherwise, any allowance paid by an employer to compensate an employee for personal expenses is included in the employee's income in the year received pursuant to paragraph 6(1)(b).

For more information see Interpretation Bulletin IT-91R4, Employment at Special or Remote Work Locations, dated June 17, 1996. The bulletin can be found on our Internet website at www.ccra-adrc-gc-ca. We trust our comments will be of assistance to you.

Yours truly,

Terry Young, CA
for Director
Business and Partnerships Division
Income Tax Rulings Directorate
Policy and Legislation Branch

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