13 August 2012 External T.I. 2012-0432671E5 - Employee Travel Expenses

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. Whether a taxable benefit would arise where an employer provides an automobile allowance to and reimburses certain meals and lodging expenses of employees that agree to work at a different work location.

Position: 1. Question of fact.

Reasons: 1. Travel between an employee's home and a regular place of employment (RPE) is personal travel. It is always a question of fact whether a particular location is a RPE for an employee. Employer-paid amounts or allowances for personal expenses are generally taxable as a benefit under either paragraph 6(1)(a) or 6(1)(b) of the Act.

XXXXXXXXXX
2012-043267
T. Baltkois
August 13, 2012

Dear XXXXXXXXXX:

Re: Taxable Benefits - Employee Travel Expenses

We are writing in response to your fax dated January 10, 2012, in which you requested our comments as to whether a taxable benefit would arise where an employer provides a travel allowance and reimburses certain employee expenses.

In the situation described, the employer has requested that employees, who regularly report for work and perform employment duties at a specific location (“1st location”), accept work shifts at a work site located in a different city (“2nd location”) due to a staff shortage at the 2nd location. An employee accepting work shifts at the 2nd location receives a per kilometre allowance for use of his or her own vehicle, the reimbursement of some meal costs and in rare circumstances, the reimbursement of lodging costs.

In general, travel between an employee's home and regular place of employment (“RPE”) is considered personal. Where an employee receives a reimbursement from, or is provided with an allowance by an employer in respect of personal or living expenses, the amount is generally taxable under paragraph 6(1)(a) or 6(1)(b) of the Income Tax Act (the “Act”), respectively, unless it falls within the exceptions listed in subparagraphs 6(1)(a)(i) to (v) or 6(1)(b)(i) to (ix) of the Act.

While it is always a question of fact whether a particular location is considered a RPE for an employee, it is the view of the Canada Revenue Agency that a particular location may be considered a RPE even though the employee may only report to work at that particular location on a periodic basis (e.g., once or twice a month) during the year. However, depending on the circumstances and facts, a location may not constitute a RPE for an employee if, for example, the employee works at that particular location only once during the year or perhaps for only a few days in the year.

Where an employee (as required by the employer or with the employer's concurrence) proceeds directly from home to a point of call other than the employee's RPE, or returns home from such a point, such travel is generally considered employment-related. In such situations, reasonable travel allowances provided to an employee for using his or her own vehicle in connection with or in the course of performing his or her employment duties and reimbursements made to an employee for reasonable meal and lodging costs incurred in such situations may not be a taxable benefit, provided that certain conditions are met. Please refer to Guide T4130, Employers’ Guide – Taxable Benefits and Allowances, for further guidance.

As noted, an employee's expenses for transportation from home to his or her RPE are personal expenses. However, subsection 6(6) of the Act provides an exemption for situations in which board and lodging and certain transportation expenses are paid by an employer in respect of employment at a "special work site" or a "remote work location". Interpretation Bulletin IT-91R4, Employment at Special Work Sites or Remote Work Locations, discusses the requirements that must be met to exclude from income the value of a benefit or reasonable allowance for board and lodging expenses and transportation to and from a particular work location. Based on the information you have provided, the 2nd location will not likely be considered a special work site or remote work location for the particular employees as it appears that they are not required to be at the 2nd location or away from their principal place of residence for at least 36 hours.

We trust these comments will be of assistance to you.

Yours truly,

Nerill Thomas-Wilkinson
Manager
for Director
Reorganizations Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch