8 June 2009 Ministerial Correspondence 2009-0318781M4 - Special Worksites and Remote Work Locations

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: Writer had concerns about the taxability of employer-provided board and lodging at a particular work location.

Position: General comments were provided on the rules for special work sites and remote work locations.

Reasons: Question of fact as to whether taxpayer's situation qualifies under subsection 6(6) of the Act.

June 8, 2009

XXXXXXXXXX

Dear Colleague:

Thank you for your letter received on April 16, 2009, and the attached correspondence from your constituent, XXXXXXXXXX , regarding the taxation of employer-provided board, lodging, and transportation in respect of employment duties performed by you and some of your co-workers at a particular work location.

Generally, the value of employer-provided benefits for an employee's personal expenses such as board, lodging, and transportation to and from a regular work place would be included in an employee's income under paragraph 6(1)(a) of the Income Tax Act unless otherwise specifically excluded by another provision of the Act.

For instance, and of potential relevance to your situation, where an employee is working at a "special work site" or a "remote work location," and provided certain rules are met, the employer can pay for an employee's board, lodging, and certain transportation on a tax-free basis by virtue of paragraph 6(6)(a) of the Act. Interpretation Bulletin IT-91R4, Employment at Special Work Sites or Remote Work Locations, provides a detailed discussion of these two exclusions. A copy of this publication can be found on the Canada Revenue Agency (CRA) Web site at www.cra.gc.ca/E/pub/tp/it91r4/it91r4/README.html.

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

(a) The employee's duties at the particular work location, whether as a full-time employee or otherwise, must be of a temporary nature (such employment at the particular work site must not be of an indeterminate nature). As a general rule, such duties will be considered to be of a temporary nature if it is reasonable to expect that the employee will not be continuously employed at that work location beyond a period of two years;

(b) Throughout the period that such duties are performed at the particular work location, the employee must maintain, at another location, a self-contained domestic establishment as the employee's principal place of residence that must remain available for the employee's occupancy (it cannot be rented by the employee to any other person during that period);

(c) The distance between the employee's principal place of residence and the work location must be such that the employee cannot reasonably be expected to commute daily. 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 kilometres from the employee's principal place of residence by the most direct route normally travelled in the circumstances; and

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

For the "remote work location" exclusion to apply, all of the following requirements must be met:

(a) The employee must work, whether as a full-time employee or otherwise, at a work location, at which, by virtue of its remoteness from any established community, the employee could not reasonably be expected to establish and maintain a self-contained domestic establishment; and

(b) The period the employee is required by the employee's duties to be at the work location must be at least 36 hours.

As a general rule, the CRA will consider a particular work location to be a remote work location if the nearest established community with a population of 1,000 or more is no closer than 80 kilometres by the most direct route normally travelled in the circumstances. However, cases not meeting this general rule are not necessarily disqualified from being a remote work location where community services and available housing at the established community are limited such that the employee could not reasonably be expected to establish and maintain at that community a self-contained domestic establishment. Where there is more than one established community located in an area, which is not remote from a work location, the sum total of the services and housing available in all established communities must be considered.

The determination of the application of the above-described exceptions can only be made after considering all the relevant facts and circumstances. To facilitate the process for claiming the special work site exemption, an employee should complete Form TD4, Declaration of Exemption - Employment at a Special Work Site, available at www.cra.gc.ca/E/pbg/tf/td4/README.html, and have it certified by his or her employer. If the employee has any questions concerning the correctness of statements on Form TD4, the local tax services office can provide assistance. Similarly, if an employer needs help in determining whether a particular work location qualifies as a remote work location, the employer is encouraged to contact its tax services office.

I trust that the information I have provided is helpful.

Sincerely,

Jean-Pierre Blackburn, P.C., M.P.

Michael Cooke
(613) 446-0484
2009-031878