26 June 2014 External T.I. 2014-0521201E5 - School board trustee mileage

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 payment to a School Board Trustee for mileage travelled to and from the division's central office to attend regular scheduled board meetings should be included in the trustee's income and in the determination of the trustee's expense allowance under subsection 81(3) of the Act.

Position: Question of fact.

Reasons: Reimbursements for personal expenses are generally taxable as a benefit under paragraph 6(1)(a) of the Act. If an amount is a reimbursement of a personal expenditure, it is included in the determination of the trustee's expense allowance that is exempt under subsection 81(3) of the Act. If the expense was incurred in the performance of the trustee's duties, the reimbursement is not taxable and thus excluded in the determination of the municipal trustee's expense allowance under subsection 81(3) of the Act. Travel between a trustee's home and a regular place of employment (RPE) is personal travel. It is always a question of fact whether a location is a RPE for a trustee.

XXXXXXXXXX
2014-052120
S. Trop

June 26, 2014

Dear XXXXXXXXXX:

Re: School board trustee mileage

We are writing in response to your correspondence dated February 7, 2014, wherein you requested clarification about the taxation of mileage paid to elected school board trustees ("trustee") for travelling to and from meetings at the board's central office.

In the situation described, the trustee is reimbursed for mileage travelled to attend meetings held at the board's central office. The board's central office is where all of the meetings are held and is the trustee's ordinary place of business. The trustee is taxed on two-thirds of the reimbursed amount.

Our Comments

This technical interpretation provides general comments about the provisions of the Income Tax Act and related legislation (where referenced).  It does not confirm the income tax treatment of a particular situation involving a specific taxpayer but is intended to assist you in making that determination.  The income tax treatment of particular transactions proposed by a specific taxpayer will only be confirmed by this Directorate in the context of an advance income tax ruling request submitted in the manner set out in Information Circular IC 70-6R5, Advance Income Tax Rulings.

The proper treatment of a reimbursement made to a trustee depends on whether the reimbursement was incurred primarily for the benefit of the trustee or the board (i.e., personal versus business).

The CRA considers a reimbursement to be a payment to repay a specific amount spent on a specific expense. If a board reimburses a trustee for personal expenses, the trustee must include the reimbursement in his or her income pursuant to paragraph 6(1)(a) of the Act. The CRA accepts that an amount paid by a board for an item that is primarily for the benefit of the board is generally not considered to be a taxable benefit to the trustee. For trustees, subsection 81(3) of the Act exempts from tax a trustee's expense allowance amount, which is generally considered to be equal to one-third of the trustee's income from the office. Where the expense allowance paid is less than one-third of the trustee's income, the actual amount will be used to determine the amount that is exempt under subsection 81(3) of the Act.

A reimbursement that is taxable under paragraph 6(1)(a) of the Act would be included as part of the total income received from the office to determine the expense allowance amount that is exempt under subsection 81(3) of the Act.

Although it is a question of fact whether the trustee's travel is personal or office-related, it is the longstanding position of the CRA that travelling between a trustee's home (including a home office) and a location at or from which a trustee regularly reports for work and performs the duties of office ("RPE") is generally personal travel. The determination as to whether a particular work location is a RPE for a trustee is always a question of fact. It should also be noted that a trustee may have more than one RPE. Any reimbursement of personal travel is included in the trustee's income under paragraph 6(1)(a) of the Act and in the determination of the trustee's expense allowance amount that is exempt under subsection 81(3) of the Act.

In summary, one-third of any reimbursement that is included in the trustee's income under paragraph 6(1)(a) of the Act will be included in the determination of the trustee's expense allowance that is exempt from tax under subsection 81(3) of the Act. Effectively, only two-thirds of these reimbursements will be taxed.

We trust these comments will be of assistance to you.

Yours truly,

Nerill Thomas-Wilkinson, CPA, CA
Manager
Business and Employment Income Section
Business and Employment Division
Income Tax Rulings Directorate