8 December 2009 External T.I. 2009-0335751E5 - Duties of a Temporary Nature

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. Will employees who are required to be at a special work site for 2 - 3.25 years still considered to be performing duties of a temporary nature? 2. What is the meaning of 36 hours in section 6(6)(a)?

Position: 1. Depends on the facts. 2. The reference to 36 hours is the total minimum amount of time that an employee is required to be at the special work site.

Reasons: Legislation and policy

2009-033575
XXXXXXXXXX Katharine Skulski
613-957-8976
December 8, 2009

Dear XXXXXXXXXX ,

Re: Duties of a Temporary Nature

I refer to your facsimile correspondence of August 7, 2009 addressed to the Income Tax Rulings Directorate.

You have explained that your company has been contracted to build a XXXXXXXXXX at a special work site and that this project is scheduled to take approximately 3.5 years. Certain of the company's employees will work at the XXXXXXXXXX site for 2 - 3.25 years. You have asked us if such employees would still qualify, notwithstanding the length of time that they will perform their duties at the XXXXXXXXXX site, for the exemption set out in subsection 6(6) of the Income Tax Act (the "Act"); namely that the value or an allowance for reasonable expenses for board and lodging or transportation will be exempt from income tax. You have also asked that we clarify whether the requirement for an employee to be away from his/her principal place of residence for at least 36 hours is a weekly, monthly or yearly amount of time for which to be away.

The particular situation outlined in your letter relates to a factual one, involving one or more specific taxpayers. As explained in Information Circular 70-6R5, it is not this Directorate's practice to comment on transactions involving specific taxpayers other than in the form of an Advance Income Tax Ruling. An Advance Income Tax Ruling is not issued where a transaction has completed or is significantly advanced. In those instances you should submit all relevant facts and documentation to the appropriate Tax Services Office for their views. However, we are prepared to offer the following general comments which may be of assistance.

Generally, the value of employer-provided board and lodging or transportation to and from a particular work location is to be included in the employee's income. However, subsection 6(6) of the Act provides an exception in limited circumstances for employment at a special work site or remote work location. Subparagraph 6(6)(a)(i) of the Act provides that there shall be excluded from an employee's income, the value of employment benefits received or enjoyed, or a reasonable allowance in respect of, expenses incurred by the employee for board and lodging at a special work site. Subparagraph 6(6)(b)(i) provides for a similar exclusion in respect of transportation to and from the special work site. Both exclusions are only available if the duties performed by the employee are of a temporary nature and if the conditions set out in the Act as well as on the Declaration of Exemption Form (TD04) are met.

You have asked us to clarify what would constitute duties of a temporary nature. The term "temporary" is not defined in the Act. However, in our Interpretation Bulletin entitled "Employment at Special Work Sites and Remote Work Locations" (IT-91R4), we have suggested that in order for duties to be of a temporary nature, the continuous employment at the special work site should not extend beyond a period of two years. This is however a general rule and there are situations where, if the facts other than the duration indicate that the duties are of a temporary nature, then amounts received for board and lodging or transportation may fall within the exemption set out in section 6(6) of the Act. Certain of the other facts which could indicate that the duties continue to be of a temporary nature include:

• whether the employee's substantive position is still maintained at another work location;
• whether the employee can be readily reassigned to another work location in or outside of Canada; and
• what, other than a self-contained domestic establishment, was maintained at the location of the principal place of residence, for example, does the employee receive social benefits from that jurisdiction or does he file his tax returns as a resident of that jurisdiction.

You have also asked that we provide clarification as to what period the 36 hours relates to. It is one of the requirements that the employee be at the special work site and away from his or her principal place of residence for a minimum of 36 hours, in order for the employee to be able to benefit from the special work site exemption. For example, if the employee was at the special work site for two nights and then returned to his or her principal place of residence and then returned to the special work site for two further nights, then any value of or allowance for board and lodging or transportation received for both periods at the work site would fall within the exemption set out in section 6(6) of the Act.

I trust that the foregoing comments are of assistance.

Yours truly,

Randy Hewlett
Acting Director
Business and Partnerships Division
Income Tax Rulings Directorate
Policy and Legislation Branch