12 September 1995 External T.I. 9518375 - ALLOWANCES

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.

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.

Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.

Principal Issues:

Where an allowance is paid in respect of lodging, is reasonable and is otherwise described in subparagraph 6(1)(b)(vii), is the allowance non-taxable? What are the Department's views on the question of reasonableness?

Position TAKEN:

The allowance is non-taxable. The question of the reasonableness is dealt with on a case-by-case basis (See paragraph 42 of IT-522).

Reasons FOR POSITION TAKEN:

The issue was previously addressed in 930692.

		951837
XXXXXXXXXX	M. Eisner

Attention: XXXXXXXXXX

September 12, 1995

Dear Sirs:

Re: Allowances for Lodging Expenses

This is in reply to your letter of July 14, 1995 concerning subparagraph 6(1)(b)(vii) of the Income Tax Act (the Act) and the payment of allowances to employees for lodging expenses.

Where an allowance relates to lodging, is reasonable, and is otherwise described in subparagraph 6(1)(b)(vii) of the Act, the allowance is non-taxable.

It is the Department's position that the question of the reasonableness of an allowance can only be dealt with on a case-by-case basis taking into account each employee's particular circumstances. Such determinations are normally the responsibility of our local tax services offices. Where an allowance is considered to be unreasonably high and the employee is unable to show that the allowance is reasonable, the whole amount of the allowance is included under paragraph 6(1)(b) of the Act in computing the employee's income and, if the employee qualifies, an amount may be deducted under paragraph 8(1)(h) of the Act. In connection with these comments we would also refer you paragraph 42 of Interpretation Bulletin IT-522 "Vehicle and Other Travelling Expenses - Employees".

We trust our comments will be of assistance to you.

Yours truly,

P.D. Fuoco
for Director
Business and General Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch