29 April 2004 External T.I. 2004-0059521E5 - Employment at a Special Work Site

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.

Principal Issues: The employee is reimbursed by the employer for the cost of a rental car to travel between the employee's temporary boarding location and the employer's office that is located at a special work site. Whether there is any other provision of the Act or administrative policy of the Canada Revenue Agency which would allow for the rental car reimbursement to be excluded from the employee's income as a taxable benefit.

Position: No

Reasons: The rental car is used to travel daily between the employee's temporary boarding location and a special work site of the employer and, therefore, the reimbursement is not exempt from inclusion in employment income as a taxable benefit by virtue of subparagraph 6(6)(b)(i). The reimbursement is not exempt under any other provision of the Act.

XXXXXXXXXX 2004-005952
Kathryn McCarthy, CA
April 29, 2004

Dear XXXXXXXXXX:

Re: Employment at a Special Work Site

We are writing in response to your letter of January 29, 2004, concerning the above-noted issue.

You described a situation in which an employee is temporarily employed at a "special work site" and meets all of the requirements of subsection 6(6) of the Income Tax Act (the Act). The employee is reimbursed by the employer for the cost of a rental car to travel between the employee's temporary boarding location and the employer's office that is located at a special work site. You noted that paragraph 10 of Interpretation Bulletin IT-91R4, Employment at Special Work Sites or Remote Work Locations, indicates that transportation assistance, other than for travel between the employee's principal place of residence and the special work site, is not exempt from employment income by virtue of subsection 6(6). You inquired whether there is any other provision of the Act or administrative policy of the Canada Revenue Agency, which would allow for the rental car reimbursement to be excluded from the employee's income as a taxable benefit.

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 ruling request submitted in the manner set out in Information Circular 70-6R5, Advance Income Tax Rulings, dated May 17, 2002. Where the particular transactions are completed, the inquiry should be addressed to the relevant Tax Services Office. We are, however, prepared to provide the following general comments.

Subsection 6(6) of the Act generally exempts from inclusion in an individual's employment income the value of benefits for board and lodging at a location which is considered a "special work site" or "remote work location". Where a particular location is a special work site pursuant to subparagraph 6(6)(a)(i), certain transportation benefits for travel between the individual's principal place of residence and the special work site are also excluded from inclusion in the individual's employment income under subparagraph 6(6)(b)(i). Where a particular location is a remote work location pursuant to subparagraph 6(6)(a)(ii), certain transportation benefits for travel between the remote work location and a location in Canada or a location in the country where the taxpayer is employed are also excluded from inclusion in the individual's employment income under subparagraph 6(6)(b)(ii).

As noted in your letter, paragraph 10 of IT-91R4 indicates that any transportation assistance relating to travel between a special work site and a location other than the employee's principal place of residence will not be excluded from income under subparagraph 6(6)(b)(i). In the situation described in your letter, the rental car is used to travel daily between the employee's temporary boarding location and a special work site of the employer and, therefore, the reimbursement is not exempt from inclusion in employment income as a taxable benefit by virtue of subparagraph 6(6)(b)(i). Further, it is also our view that the reimbursement is not exempt under any other provision of the Act.

The above noted publications are available on our website at www.cra-arc.gc.ca. We trust our comments will be of assistance to you.

Yours truly,

Randy Hewlett, B. Comm.

for Director
Business and Partnerships Division
Income Tax Rulings Directorate
Policy and Planning Branch