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.
SUMMARY: Northern resident's deduction—ITA-110.7(1)(a)—Whether a travel allowance can be paid in advance on a per hour basis.
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: can a travel allowance be paid in advance on a per hour basis? POSITION: YES,
REASONS: income tax guides and 110.7(1)
XXXXXXXXXX 983331 C. Tremblay Attention: XXXXXXXXXX
February 16, 1999
Dear Sir, Re: Northern Resident's Deduction
This is further to our letter (980782) of July 28, 1998. As a result of a submission from XXXXXXXXXX , we have reconsidered our response as it applies to the Northern Residents Travel Deduction. A clause in a collective agreement between your company and XXXXXXXXXX states: “XXXXXXXXXX”. In our prior letter, we opined that there must be a connection between the actual travelling expenses incurred by a taxpayer or a member of the taxpayer's household and the amounts paid by the taxpayer's employer to defray those costs. We are still of that view, but since a corporation may pay its employees before the trip, we are also of the view that a clause that requires the company to designate a travel allowance based on a certain amount of the employee's wages as being travel benefits, is acceptable provided the actual portion of the hourly wage is a reasonable agreed amount. Further, it should be clear to all employees that the amount reported in box 32 of the T-4 information slip is an advance towards travelling and that the permitted deduction under paragraph 110.7(1)(a) of the Act is limited to that amount. This practice is reflected in Chapter 3 of the guide titled, Employer's Guide to Housing and Travel Assistance Benefits Paid in Prescribed Zones. We trust that our comments will be of assistance to you Your truly
J. F. Oulton, CA for Director Business and Publications Division Income Tax Rulings and Interpretations Directorate Policy and Legislation Branch
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