12 April 2017 External T.I. 2016-0642571E5 - Employee travel - board and lodging

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: Can employees of a logging company claim a deduction under paragraph 8(1)(h) of the Income Tax Act for amounts paid to their employer for board and lodging at a logging camp?

Position: Question of fact, but likely no.

Reasons: The board and lodging at the camp are not considered to be incurred exclusively for travel in the course of employment.

XXXXXXXXXX					2016-064257
R. Dubis, CPA, CA
April 12, 2017

Dear XXXXXXXXXX

Re: Employee travel expenses

We are writing in response to your letter of April 8, 2016, wherein you asked whether board and lodging fees charged by XXXXXXXXXX to its employees for staying at a remote forest camp while working on logging activities on XXXXXXXXXX are deductible from the employees’ employment income. More specifically, you asked whether the board and lodging fees are deductible as a travel expense under paragraph 8(1)(h) of the Income Tax Act (the “Act”).

In your letter, you state that the employees travel from home to the camp where the employees are provided with board and lodging by XXXXXXXXXX for a fee of $XXXXXXXXXX per day. The employees travel between the camp and the cutting site on a daily basis using transportation provided by the XXXXXXXXXX.

Our Comments

This technical interpretation provides general comments about the provisions of the Act and related legislation. 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 70-6R7, Advance Income Tax Rulings and Technical Interpretations.

Subsection 8(2) of the Act provides that no deductions are allowed in computing an individual’s income from employment except as specifically authorized under section 8 of the Act. Generally, these deductions are restricted to certain expenses incurred while performing employment duties.

Paragraph 8(1)(h) of the Act permits a deduction for travel expenses (e.g., food, beverage, and lodging expenses) where all of the following conditions are met:

• The travel expenses were incurred exclusively in the course of employment;
• The employee is ordinarily required to carry on the duties of employment away from the employer’s place of business or in different places;
• The employee was required under the contract of employment to pay any travel expenses incurred in the performance of the employment duties;
• The employee has not claimed a deduction under any of paragraphs 8(1)(e), (f), or (g) of the Act; and
• The employee was not in receipt of a non-taxable allowance for such travel expenses.

Paragraph 32(c) of IT-522R, Vehicle, Travel and Sales Expenses of Employees, states that the expression employer’s “place of business” is generally considered to refer to a permanent establishment of the employer such as an office, factory, warehouse, branch or store, or to a field office at a large construction job. Whether an employee is ordinarily required carry on their duties away from the employer’s place of business is a question of fact that can only be determined on a case-by-case basis.

Based on the information provided, XXXXXXXXXX maintains a camp to which its employees are required to report to daily. It is our view that the camp is a place of business for XXXXXXXXXX. Therefore, any expense incurred by the employee for board and lodging at the camp is not considered to be an amount incurred exclusively by the employee for travelling in the course of employment (that is, the expenses were not incurred while travelling away from the employer’s place of business). As a result, the cost of board and lodging to stay at the camp would not be deductible under paragraph 8(1)(h) of the Act.

We trust these comments will be of assistance to you.

Yours truly,

Nerill Thomas-Wilkinson, CPA, CA
Manager
Business and Employment Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch