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) When a particular work location becomes a regular place of employment (RPE) for an employee. 2) Whether there are circumstances when the value of employer-provided transportation between an employee’s home and his or her RPE (or a reasonable allowance or reimbursement received in respect of such travel) is not included in income. 3) Whether tax consequences may arise when an employer reimburses an employee for the cost of a rental car (including its rental cost, insurance, mileage, and gas) that is used for both personal and employment-related travel.
Position: See response.
Reasons: See response.
December 4, 2018
Re: Regular places of employment and personal travel
We are writing in response to your correspondence of October 11, 2016, in which you requested clarification as to when a particular work location is considered a regular place of employment for an employee. Thank you for your understanding regarding the delay of this response.
You have also asked whether tax consequences may arise when an employer reimburses an employee for the cost of a rental car (including the rental cost, insurance, mileage, and gas) that is used for both personal and employment-related travel.
This technical interpretation provides general comments about the provisions of the Income Tax Act (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 70-6R8, Advance Income Tax Rulings and Technical Interpretations.
Regular place of employment
It is the longstanding position of the Canada Revenue Agency (CRA) that travel between an employee’s home, including a home office, and a regular place of employment (RPE) is generally considered personal travel, and that any expenses related to that travel are personal expenses. However, where an employer requires an employee to proceed directly from home to a point of call (for example, a client’s office), return home from a point of call, or travel between two RPEs, such travel is employment travel. Any expenses related to that travel are employment expenses.
A RPE is any location where an employee regularly reports for work or performs the duties of employment. In this case, “regular” means there is some degree of frequency or repetition in the employee’s reporting to that particular work location in a given pay period, month, or year. This “place” does not have to be an establishment of the employer. For example, a work location may be considered to be a RPE for an employee 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.
Whether a work location is a RPE for an employee is a question of fact that must be determined on an employee by employee basis.
Travel allowances or reimbursements
Paragraph 6(1)(b) of the Act includes in an employee’s income all allowances or advances received in the year for personal or living expenses, or for any other purpose, unless specifically excluded by another provision of the Act. An allowance or advance is any periodic or lump-sum payment that an employee receives without having to account for its use and is:
- usually an arbitrary amount that is predetermined without using the actual cost;
- usually for a specific purpose; and
- used as the employee chooses, since the employee does not provide receipts.
By contrast, a reimbursement is a payment made to repay an amount an employee spent on a specific expense incurred while carrying out employment duties, and for which detailed receipts are provided.
Generally, the value of an employer-provided allowance or reimbursement for personal travel is included in an employee’s income under 6(1)(a) or (b) of the Act. The CRA has a longstanding position that is outlined in Guide T4130, Employers’ Guide – Taxable Benefits and Allowances which provides an exception concerning personal travel. It states that:
“An employee’s travel between home and a regular place of employment may be “business” related (and not a taxable benefit) if:
- you need to provide your employees with transportation from pickup points to an employment location when public and private vehicles are neither allowed nor practical at the location because of security or other reasons.
- you need to provide transportation to your employee who works at a special work site or a remote location.”
Whether an employer provides transportation for security reasons is a question of fact that must be determined on an employee by employee basis. In our view, the exception for security reasons outlined in Guide T4130 is limited to employer-provided transportation, and does not apply in situations where an employer provides a reimbursement or allowance in respect of such travel.
In the situation you described, the employer does not appear to be providing transportation for security reasons and it does not appear that public and private vehicles are prohibited or impractical at the work locations.
Therefore, travel between the employees’ homes and each of the various work locations (i.e., RPEs) would likely be personal travel and the value of any employer-provided allowance (including a reasonable per-kilometre allowance) or reimbursement for such travel would be included in the employee’s income under paragraph 6(1)(a) or (b) of the Act unless the work location is a special work site.
Subparagraph 6(6)(b)(i) of the Act excludes from an employee’s income certain transportation benefits and allowances related to a special work site, where the conditions in subparagraph 6(6)(a)(i) of the Act have been met and the employee has received board and lodging, or a reasonable allowance in respect of board and lodging. These conditions are described in paragraph 4 of Interpretation Bulletin IT-91R4, Employment at Special Work Sites or Remote Work Locations.
In such cases, the value of a reasonable employer-provided allowance or reimbursement for travel between an employee’s principal place of residence and a special work site is excluded from the employee’s income, regardless of whether the special work site is a RPE for the employee.
However, if a special work site is a RPE for an employee, the value of a reasonable employer-provided allowance or reimbursement for travel between the employee’s temporary place of residence (e.g., a hotel, camp, rental home, etc.) and the special work site is included in the employee’s income under paragraph 6(1)(a) or (b) of the Act.
When an employer reimburses an employee for the rental and operating costs of an automobile that was rented by the employee and used for both personal and employment-related travel, any reimbursement attributable to the employee’s personal travel will be included in the employee’s income.
The reimbursement of the rental cost attributable to the employee’s personal travel is included in the employee’s income under paragraph 6(1)(a) of the Act. Further, any reimbursement of the operating cost attributable to the employee’s personal travel is included in the employee’s income under paragraph 6(1)(l) of the Act.
If the employer instead provides an allowance for the rental and operating costs, the allowance is included in the employee’s income under paragraph 6(1)(b) of the Act, unless the conditions in subparagraphs 6(1)(b)(v), (vi), (vii), or (vii.1) are met. Subparagraphs 6(1)(b)(v), (vi), (vii), and (vii.1) generally exclude from income, reasonable employer-provided allowances for employment-related travel.
We trust these comments will be helpful.
Nerill Thomas-Wilkinson, CPA, CA
Business and Employment Income Section
Business and Employment Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch
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