2 August 2002 External T.I. 2002-0143165 - Special work site allowance - Angola

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 CCRA.

Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ADRC.

Principal Issues: Is a per diem allowance for board and lodging while working in Angola exempt from tax?

Position: Likely, depends on facts.

Reasons: Criteria in subsection 6(6) of the Income Tax Act appear to be met.

XXXXXXXXXX 2002-014316
T. Cook
August 2, 2002

Re: Taxation of Per Diem Allowance

Dear XXXXXXXXXX:

We are writing in reply to your letter of May 22, 2002, in which you asked whether you could get a tax exemption for a per diem allowance that you received while working in Angola for a XXXXXXXXXX company. XXXXXXXXXX We understand that you have a home in Canada and worked in Angola for a number of months. As explained in Information Circular 70-6R5, it is not this Directorate's practice to comment on the tax consequences applicable to a specific taxpayer in respect of particular circumstances other than in the form of an advance income tax ruling. We are, however, prepared to offer the following general comments, which may be of assistance.

As explained in our telephone conversation with you on June 4, 2002 (Ted Cook/XXXXXXXXXX), certain allowances are exempt from tax under subsection 6(6) of the Income Tax Act (the "Act"). Subsection 6(6) provides that when an individual is employed at a special work site or a remote work location and receives a reasonable allowance for board and lodging, the individual does not have to include the allowance in his or her income for tax purposes. In order to qualify for the special work site exemption, the following criteria must be met:

? The employee's duties were of a temporary nature (generally continuous employment of more than two years would not qualify);

? The employee kept a principal place of residence at another location and could not have been expected to return daily from the special work site;

? The principal place of residence was not rented out and was available for the use of the employee; and

? The employee was required, by virtue of his or her duties at the special work site, to be away from his or her principal place of residence for at least 36 hours.

These criteria (and the criteria relating to remote work locations) are explained in Interpretation Bulletin IT-91R4, Employment at Special Works Sites or Remote Work Locations. This bulletin can be accessed on the Canada Customs and Revenue Agency (the "CCRA") website at http://www.ccra-adrc.gc.ca or obtained from your local tax services office.

We trust that these comments are of assistance. As stated in paragraph 22 of Information Circular 70-6R5, the opinion expressed in this letter is not a ruling and consequently is not binding on the CCRA.

Yours truly,

Jim Wilson
Section Manager
for Director
International and Trusts Division
Income Tax Rulings Directorate
Policy and Legislation Branch
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