4 November 1999 External T.I. 9925155 - SPECIAL WORKSITES

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: An employee ("A") moves (a distance of 200 kilometres) from one city (City B) to another city (City C) in connection with a 5 month employment contract. A rents accommodation in City C and maintains her residence in City B which A does not rent. A is required to pay her meal and rent expenses at the new location. As A does not receive a board and lodging allowance from her employer, can A claim expenses under section 8 in respect of the accommodation and meals.

Position: No

Reasons: There is no provision within section 8 of the Income Tax Act (the "Act") that would permit A to do so (see subsection 8(2) of the Act) even though an allowance from the employer in respect of board and lodging would not be taxable by virtue of subsection 6(6) of the Act..

XXXXXXXXXX 992515
M. Eisner
November 4, 1999

Dear XXXXXXXXXX:

Re: Employment Expenses

This is in reply to your letter of September 16, 1999, concerning the above-noted subject.

You have indicated that in the business of XXXXXXXXXX, it is quite typical for an employee to relocate to a different city to accept temporary work contracts.

In the situation outlined, an individual ("A") lives in XXXXXXXXXX ("City B"). She accepts a contract of employment to work for five months at XXXXXXXXXX ("City C"), which is about 200 kilometres from A's residence. As a result of the long work hours and the distance, A rents accommodation in City C. A also has significantly higher meal and incidental expenses in relation to such expenses that would be incurred if A lived in City B. A does not receive any allowance from the employer and is required to pay her living expenses (meals, accommodation, etc.) while in City C. Throughout the employment contract, A maintains her home in City B and has not rented it to a tenant.

With respect to the above situation, you have indicated that subsection 6(6) of the Act is not applicable. However, you have asked us whether it is possible for A to claim a deduction in respect of the costs of living in City C.

Our Comments

The above situation appears to involve an ongoing or completed transactions. In order to determine the tax consequences of such a transaction, it is necessary to review the relevant facts and documentation. Such a review falls within the responsibility of local tax services office. Written confirmation of the tax consequences inherent in particular transactions is only given by this Directorate where the transactions are proposed and are the subject matter of an advance income ruling request pursuant to Information Circular 70-6R2. However, we are prepared to provide the following general comments on your situation.

With respect to the deduction of expenses by employees, subsection 8(2) of the Income Tax Act (the "Act") provides that "Except as permitted by this section, no deductions shall be made in computing a taxpayer's income for a taxation year from an office or employment." In our view, there is, unfortunately, no provision within section 8 of the Act which would permit A to deduct personal and living expenses.

However, A may be eligible to claim moving expenses. For general comments in this regard, we refer you to page 24 of the "General Income Guide", which has been enclosed. For your further information we have enclosed a copy of page 9 and 10 of the Employment Expenses guide which deal with artists' employment expenses.

We regret that our reply could not be more favourable.

Yours truly,

John Oulton
for Director
Business and Publications Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch

??

- 2 -