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: Part I: Is a work site for logging work a special work site? Is there a taxable benefit to the employee for employer-paid board and lodging and travel costs?
Part II: Is the travel from the employer's home office to the logging site personal travel of the employee?
Position: Part I: Question of Fact. In this case likely yes. No taxable benefits if the exceptions relating to a special work site apply.
Part II: Question of Fact.
Reasons: Part I: The requirements to determine whether a work site is a special or remote work location are provided in subsection 6(6) of the Income Tax Act. A special work site is a location at which the duties performed are of a temporary nature, usually less than 2 years. The exceptions in subsection 6(6) apply in this case.
Part II: Travel between two places of business of the employer is not considered personal. Where an employee is required to travel from home to the employer's home office before travelling to a logging site, the travel from the employer's home office to the logging site will not be considered personal.
XXXXXXXXXX Luisa A. Majerus, CA
June 14, 2006
Re: Special Work Site and Taxable Benefits
This is in reply to your letters dated August 31, September 6 and September 7, 2005, requesting information on various issues with respect to taxable benefits. We apologize for the delay in responding. We acknowledge that the issues outlined in your letters relate to two separate clients of your office. We have provided our comments relating to taxable benefits at a special work site in Part I. In Part II, we have provided our comments relating to taxable benefits from the personal use of an employer-provided vehicle.
Part I - Special Work Site
You inquired whether the following logging site is considered a "special work site". A company incorporated in XXXXXXXXXX ("Logco") is considering taking on temporary logging work in XXXXXXXXXX. Logco has signed a six-month renewable contract to carry out the logging work in XXXXXXXXXX. You have indicated that is it unlikely that Logco will renew the contract. Logco will pay for the board, meals, travel etc, of its employees to carry out the work. The employees of Logco will go to XXXXXXXXXX to work for six-month periods following which they will return to work in XXXXXXXXXX with Logco. The employees will maintain their permanent residences in XXXXXXXXXX, where their families reside during their absence.
Paragraph 6(1)(a) of the Income Tax Act (the "Act") provides that the value of board, lodging and other benefits of any kind whatever received or enjoyed by the taxpayer in the year in respect of, in the course of, or by virtue of an office or employment will be included in computing the income of a taxpayer for a taxation year as income from an office or employment. However, 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 that is considered a "special work site". In addition, 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).
As discussed in our Interpretation Bulletin IT-91R4, "Employment at Special Work Sites or Remote Work Locations" ("IT-91R4"); 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";
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.
As noted in paragraph 5 of IT-91R4, the term "temporary" is not defined in the Act. However, as a general rule, duties will be considered to be of a temporary nature if it can reasonably be expected that they will not provide continuous employment beyond a period of two years. The determination of the expected duration of employment must be made on the basis of the facts known at its commencement.
Based on the information provided, it is our view that the duties of the employees working in XXXXXXXXXX are considered to be "temporary". Accordingly, the special work site exclusion will apply where the requirements in (a) to (d) above are met.
Part II - Use of Employer Provided Vehicle
The second issue you would like us to address is whether there is a taxable benefit to employees for the use of the employer-provided pick-up trucks. Generally, the employees use the pick-up truck to travel from their home to the employer's home office and then from the employer's home office to a work site that is a logging site.
It is your understanding that the travel from the employee's home to the employer's home office is personal travel for purposes of calculating the employee's taxable benefit. You are requesting our views on whether the travel between the employer's home office and the logging site is also personal for this purpose.
In general, the personal use of a motor vehicle includes travel between an employee's home and the employer's place of business. However, travel between two places of business of an employer is not considered personal. If in the situation you described an employee is required by the employer to first travel to the employer's home office for business reasons and then proceed to a logging site, the travel between the employer's home office and the logging site will not be considered personal. For more information on the personal use of an employer-provided motor vehicle please refer to Interpretation Bulletin, IT-63R5, Benefits, Including Standby Charge for an Automobile, from the Personal Use of a Motor Vehicle Supplied by an Employer - After 1992. Copies of our Interpretation Bulletins can be found on our website at www.cra-arc.gc.ca.
We trust these comments are helpful.
Business and Partnerships Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch
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