31 May 2005 External T.I. 2005-0122531E5 - Accomodation Allowance

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: Is the accomodation allowance a taxable benefit to the elected representatives of the professional labour organization? Is the allowance reasonable? Is the organization maintaining adequate records to support the payment of the allowance?

Position: No. Question of Fact, in this case yes. Yes.

Reasons: The elected representatives are officers and employees of the organization and receive allowances that qualify for the exclusion under subparagraph 6(1)(b)(vii) of the Act.

2005-012253
XXXXXXXXXX Luisa A. Majerus, CA
(613) 832-3488
May 31, 2005

Dear XXXXXXXXXX:

Re: Accommodation Allowance

This is in reply to your letter received March 24, 2003, requesting our views on whether the allowance to be paid to the organization's elected representatives for overnight accommodation is a taxable benefit. In addition, you have requested our views on whether the amount of the allowance is reasonable and whether you are maintaining adequate records to support the payment of the allowance.

Background

You are the treasurer of a professional labour organization ("PLO") in Ontario that holds monthly board meetings in XXXXXXXXXX. Elected representatives of the PLO must travel to XXXXXXXXXX to attend these meetings. The PLO has been reimbursing the representatives for their travel and accommodation expenses to attend these meetings. The PLO would like to pay the representatives a $30/night accommodation allowance to attend the meetings.

The PLO will maintain a file of the following information:

1) A list of elected representatives;

2) The representatives' home address and regular place of employment;

3) The meeting registration list of representatives; and

4) The minutes of the meeting indicating the representatives in attendance.

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 general comments.

Generally, subsection 5(1) of the Income Tax Act (the "Act") includes in a taxpayer's income for a taxation year salary, wages and other remuneration received in the year in respect of an office or employment. An office is defined in subsection 248(1) of the Act to include any position that entitles an individual to a fixed or ascertainable stipend or remuneration. It also includes positions where the incumbent is elected or appointed in a representative capacity. An officer is included in the definition of employee in subsection 248(1) of the Act.

Subparagraph 6(1)(b)(vii) of the Act specifically excludes from income all amounts received by the taxpayer in the year, as an allowance for personal or living expenses, that is a reasonable allowance for travel expenses received by an employee from the employer for travelling away from the municipality where the employer's establishment, at which the employee ordinarily worked, was located. Whether the allowance of $30/night, paid by the PLO, is reasonable is a question of fact. However, in general terms, if it is designed to cover reasonable out-of-pocket costs that the elected representative will incur for the accommodations, then it will likely be considered reasonable.

We trust this information meets your needs at the current time.

Yours truly,

John Oulton, CA
For Director
Business and Partnerships Division
Income Tax Rulings Directorate
Policy and Planning Branch