9 December 2008 External T.I. 2008-0291081E5 - Motor Vehicle Expenses - 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: 1) Is travel from a special work site to an employee's principal place of residence considered business or personal?

2) Where an employee is working at a special work site under subsection 6(6), is travel from the temporary place of residence (e.g., hotel) to the special work site considered business or personal?

Position: 1) Personal and non-taxable.

2) Personal and taxable.

Reasons: 1) Personal, however, the benefit will be excluded from income pursuant to subparagraph 6(6)(b)(i) of the Act.

2) It is well established tax policy that traveling between an employee's home (in this case, the employee's temporary place of residence, the hotel) and an employer's business to which an employee reports regularly is personal in nature. The benefit derived from the use of an employer-provided motor vehicle in respect of such travel will give rise to a taxable benefit under section 6 of the Act. This benefit will not be excluded from income pursuant to subparagraph 6(6)(b)(i) of the Act.

XXXXXXXXXX 2008-029108
Renee Sigouin
December 9, 2008

Dear XXXXXXXXXX :

Re: Special Work Site: Employer-Provided Vehicle

This is in response to your letter of June 19, 2008 requesting information on various taxable benefit related matters. We have provided our comments relating to taxable benefits from the personal use of an employer-provided vehicle in the context of a "special work site". Please note, however, that the questions concerning the completion of Form 2200, "Declaration of Conditions of Employment" have been referred to our Trust Accounts Division, a representative of which will respond to you directly.

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 a request for an advance income tax ruling submitted in the manner set out in Information Circular 70-6R5, "Advanced Income Tax Rulings", dated May 17, 2002. This Information Circular and other Canada Revenue Agency ("CRA") publications can be accessed on the internet at http://www.cra-arc.gc.ca. Where the particular transactions are complete, the inquiry should be addressed to the relevant tax services office, a list of which is available on the "Contact Us" page of the CRA website. Although we cannot comment on your specific situation, we are prepared to provide the following comments in respect of the issues that you raised. Please note, however, that these comments are of a general nature only and are not binding on the CRA.

You have indicated that an employee who maintains a residence in XXXXXXXXXX has been seconded for a XXXXXXXXXX term to work in XXXXXXXXXX . The employee has been provided with hotel accommodation in XXXXXXXXXX by his employer from Monday to Thursday and returns to XXXXXXXXXX after work on Friday for the weekend. You have asked whether a taxable benefit would arise with respect to certain travel undertaken by the employee in the company-provided vehicle.

Generally speaking, travel between an employee's home and his or her regular place of employment is personal in nature. This means that the use of an employer-provided vehicle in respect of such travel will give rise to a taxable benefit under section 6 of the Act. The Act provides various exceptions to the general rule.

One such exception arises under paragraph 6(6)(b) of the Act, which provides that an employee who, for a particular period of time, receives subsidized board and lodging at a special work site (or a reasonable allowance in respect of board and lodging) will not be required to include in income the value of (or a reasonable allowance received in respect of), free or subsidized transportation between the employee's principal place of residence and the special work site during that period. However, any subsidy or allowance relating to other personal travel will not be excluded from income under paragraph 6(6)(b) of the Act.

As discussed in Interpretation Bulletin IT-91R4, "Employment at Special Work Sites or Remote Work Locations" ("IT-91R4"), for the special work site exemption 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. It is also noted in paragraph 9 of IT-91R4 that as a general rule, an employee will not be expected to return to his or her principal place of residence if the work site is more than 80 kilometers from the employee's principal place of residence by the most direct route normally traveled in the circumstances. Where the conditions described above are met, it is our view that the employer-provided transportation relating to the employee's travel between his or her principal place of residence in XXXXXXXXXX and the special work site in XXXXXXXXXX would be considered personal in nature but, by virtue of the exception in paragraph 6(6)(b) of the Act, would not give rise to a taxable benefit for tax purposes. However, employer-provided transportation relating to the employee's travel between his or her temporary residence (i.e., in your example, the hotel) and regular place of employment at the special work site would be considered personal in nature and would give rise to a taxable benefit under section 6 of the Act.

As you are aware, further information with respect to the personal use of employer-provided motor vehicles is provided in IT-63R5 - "Benefits, Including Standby Charge for an Automobile, from the Personal Use of a Motor Vehicle Supplied by an Employer - after 1992".

Please also note that to facilitate the process of claiming the exemption in subsection 6(6) of the Act, the employee should complete Form TD4 and have it certified by the employer. Employers having questions concerning the correctness of statements on the form should contact their local TSO for assistance. You may also want to refer to Chapter 3 of CRA Guide T4130, "Employers' Guide - Taxable Benefits," which can be obtained from our website www.cra-arc.gc.ca.

Yours truly,

Renée Shields
for Director
Business and Partnerships Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch