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 certain employees qualify under subsection 6(6)(a)(ii) of the Act on the basis that the particular work location is remote from an established community.
Position: Question of fact but probably not a remote work location. Some general comments on special work site have also been provided.
Reasons: Must be determined on a case-by-case basis. We don't have all the facts.
XXXXXXXXXX 2009-033290
October 20, 2009
Dear XXXXXXXXXX :
Re: Special Work Site and Remote Work Location
We are writing in response to your email of July 17, 2009, wherein you asked about the taxability of certain employer-paid amounts in the following situation.
Some of your company's employees perform their duties of employment at a work location that is located approximately XXXXXXXXXX .
Employees are typically required to work for XXXXXXXXXX days at the work location following which they receive XXXXXXXXXX days off. Typically, an employee will work a XXXXXXXXXX hour shift each day.
The employees receive employer-provided board and lodging while working at the work location. The employees also receive bus transportation to and from the XXXXXXXXXX airport to the work location plus a $XXXXXXXXXX per month travel allowance/subsidy. The intent of the $XXXXXXXXXX per month travel allowance/subsidy is to reimburse the employees for the cost of one round trip bus ride to XXXXXXXXXX from XXXXXXXXXX .
You ask whether the work location would qualify as a remote work location for the purposes of subsection 6(6) of the Income Tax Act (the "Act").
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 Act unless otherwise specifically excluded by another provision of the Act.
For instance, and of potential relevance to your company's 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 costs on a tax-free basis by virtue of paragraph 6(6)(a) of the Act.
While you are aware of the comments in Interpretation Bulletin IT-91R4, Employment at Special Work Sites or Remote Work Locations, it is worth summarizing the conditions that must be met for a particular work location to be considered as a "special work site" or a "remote work location" in respect of a particular employee.
Special Work Site Location
For the special work site benefit exclusion 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 (i.e., 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 (i.e., 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;
(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.
Where an employee qualifies for the special work site exclusion reasonable amounts for board and lodging provided by the employer for a period while the employee is at the special work site would not be taxable. Similarly, as set out in subparagraph 6(6)(b)(i) of the Act, employer-provided transportation assistance for travel between an employee's principal place of residence and the special work site would not be taxable.
To facilitate the process for claiming the special work site benefit exclusion, 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 there are any questions concerning the correctness of statements on Form TD4, the local tax services office can provide assistance.
Remote Work Location
For the remote work location benefit 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 described in paragraph 14 of IT-91R4, as a general rule the CRA considers 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. Cases not meeting this general rule are not necessarily disqualified from being a remote work location and will be considered on their merits. When determining whether a work location is in fact remote from an established community, the following factors may also be considered:
- the availability of transportation;
- the distance from an established community; and
- the time required to travel that distance.
Paragraph 16 of IT-91R4 also provides that where an established community is in an area which is not remote from a work location the conditions described in (a) above may be met if 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.
While the determination of the application of the above-described benefit exclusions can only be made after considering all the relevant facts and circumstances on a case-by-case basis, it is our view that XXXXXXXXXX is an established community. Moreover, since the company's work location is clearly less than 80 kilometres from XXXXXXXXXX and since we have not been provided with any evidence (e.g., that community services and available housing in XXXXXXXXXX are limited) that would support a finding that the company's work location is sufficiently remote from XXXXXXXXXX , we are unable to confirm that the company's work location is sufficiently remote from XXXXXXXXXX .
However, if you should need further assistance in determining whether the company's work location qualifies for the remote work location benefit exclusion, we would encourage you to contact the local tax services office.
We trust the above comments are of assistance.
Yours truly,
Renée Shields
for Director
Business and Partnerships Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch
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