9 March 2004 External T.I. 2004-0060011E5 - 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: Whether benefits for accommodation, travel and meal expenses are exempt from employment income by virtue of subsection 6(6) of the Act, where a union pays the amounts for its members who are on a leave of absence without pay from their permanent jobs for a period of three to six months, and the union employs the individuals during this period while they are participating in a union-mentorship program at a location that is away from the location where they permanently reside.

Position: Yes, provided all the requirements in subsection 6(6) of the Act are met.

Reasons: Subsection 6(6) of the Act and IT-91R4.

XXXXXXXXXX Randy Hewlett, B. Comm.

2004-006001
March 9, 2004

Dear XXXXXXXXXX:

Re: Special Work Sites - Subsection 6(6) of the Income Tax Act (the "Act")

We are writing in response to your letter of February 2, 2004, wherein you requested our opinion on the application of subsection 6(6) the Act in the situation described below.

In your letter, you indicated that the union has members who are on a leave of absence without pay from their permanent jobs for a period of three to six months so that they can participate in a union-mentorship program. During the period of absence from their permanent jobs, the union pays the members a salary and reimburses the employer to continue regular employment benefits. The union also pays, reimburses or provides an allowance in respect of the accommodation, travel and meal expenses of the members who are required to temporarily relocate to the city where the mentorship program is offered.

You are aware that during the period the members are participating in the mentorship program, they are considered employees of the union and that the salary and benefits paid by the union are taxable employment income of the members. You inquired whether the amounts paid by the union in respect of expenses for accommodations, travel and meals are exempt from employment income because the members are employed at a special work site.

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 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. However, we offer the following comments.

In general terms, employer-paid amounts for accommodations, meals and transportation expenses incurred by an individual who is performing the duties of an office or employment at a location that is considered the individual's regular place of work, must be included in the individual's employment income under subsection 6(1) of the Act. However, subsection 6(6) of the Act may exempt such personal expenses from inclusion in an individual's employment income where they are incurred in respect of the employment at a "special work site".

Interpretation Bulletin IT-91R4, Employment at Special Work Sites or Remote Work Locations, discusses the requirements that an individual must meet in order to exclude from income the value of a benefit or reasonable allowance for board and lodging expenses incurred in respect of employment at a special work site. If the individual meets these requirements, transportation benefits or allowances in respect of expenses incurred for travel between the individual's principal place of residence and the special work site are also excluded from employment income.

For the special work site exclusion to apply, all of the following requirements must be met:

(a) The duties of the office or employment performed by the individual at the work location are of a temporary nature (as a general rule, duties will be considered of a temporary nature if it can reasonably be expected that they will not provide continuous employment at a work location beyond a period of two years);

(b) Throughout the period the duties of the office or employment are performed at the work location, the individual maintains at another location a self-contained domestic establishment as the individual's principal place of residence, which is available for the individual's occupancy and not rented by the individual to any other person;

(c) The distance between the individual's principal place of residence and the work location is such that the individual cannot reasonably be expected to commute daily; and

(d) The period the individual is required to be away from the principal place of residence at the work location because of the duties of the office or employment is at least 36 hours.

Provided all of the above requirements are met, we are of the view that an allowance, reimbursement, or payment by the union in respect of reasonable expenses incurred by an individual who is away from his or her principal place of residence while participating in the mentorship program, is exempt from inclusion in the individual's employment income by virtue of subsection 6(6) of the Act.

We trust our comments are of assistance.

Yours truly,

John Oulton, CA
Manager
Business and Individual Section
Business and Partnerships Division
Income Tax Rulings Directorate
Policy and Planning Branch