29 January 2007 External T.I. 2006-0200171E5 - Mileage 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:

Whether an allowance or reimbursement paid to teachers who are on call as substitutes in respect of travel between home and the workplace is a taxable employee benefit under the Act.

Position:

For income tax purposes, travel between home and the workplace is personal in nature and applies equally to regular scheduled work trips and the trips that occur while an employee is on call. Accordingly, any payment in respect of such travel is a taxable benefit to the employee under subsection 6(1). Subsection 81(3.1) exempt from employment income an allowance or reimbursement with respect to travel expenses paid by an employer to a part-time employee for travel necessitated by the part-time employment, where certain conditions are satisfied.

Reasons:

Understanding of long standing policy objectives of the legislation.

									2006-020017
XXXXXXXXXX 								D Tiu
(613) 957-8961
January 29, 2007

Dear XXXXXXXXXX:

Re: Mileage Allowance

We are writing in response to your August 4th, 2006 inquiry on the above subject and further to our subsequent telephone discussions (XXXXXXXXXX/Tiu). You inquired whether an allowance or reimbursement paid to teachers who are on call as substitutes in respect of travel between home and the workplace is a taxable employee benefit under the Income Tax Act (the "Act").

Written confirmation of the tax consequences inherent in a particular transaction or series of transactions are 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. In any event, a request cannot be considered for a ruling when the transactions are completed or where the issues involved are primarily questions of fact. Notwithstanding the foregoing, we are prepared to provide the following general comments.

For income tax purposes, travel between home and the workplace is personal in nature and applies equally to regular scheduled work trips and the trips that occur while an employee is on call. Accordingly, any payment in respect of such travel will give rise to a taxable benefit to the employee under subsection 6(1).

As discussed, however, subsection 81(3.1) does exempt from employment income an allowance or reimbursement with respect to travel expenses paid by an employer to a part-time employee for travel necessitated by the part-time employment, where all of the following conditions are satisfied:

• The employment is part-time with an arm's length employer.
• The employee has other employment or carries on a business throughout the period in which the travel expenses are incurred, except where the employer is a designated educational institution (i.e., a university, college or other educational institution providing courses at a post-secondary school level) and the duties of the part-time employment are the provision of services as a teacher or professor in Canada.
• The amount must be reasonable and not be an allowance or reimbursement of expenses incurred in the performance of the part-time employment duties.
• The part-time employment duties must be performed at least 80 kilometres from both the employee's ordinary place of residence and the employee's place of employment or business.

We trust that the foregoing is satisfactory.

Yours truly,

Randy Hewlett
Section Manager
For Division Director
Business and Partnerships Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch