10 July 1990 Income Tax Severed Letter AC59787 - Moving Expenses - Interpretation of "Remote" Place in IT-470R

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.

Donald J. MacDonald Director, Personal Income Tax Division

Tax Policy and Legislation Branch            5-9787            
Department of Finance                        Business and General
140 O'Connor Street                            Division
Ottawa, Ontario                              A.Humenuk
KlA 0G5                                      (613) 957-2135

JUL 10 1990

Dear Mr. Macdonald:

We are replying to your letter of March 15, 1990, concerning the meaning of the word "remote" as used in paragraphs 36 and 37 of Interpretation Bulletin IT-470R .

In the bulletin we make the statement that a taxable benefit will not be assessed where the employer pays an employee's removal expenses upon the termination of employment out of a remote location. You have asked to develop a definition of remote for this purpose. You suggested that the qualification criteria for the Northern Residents Deduction might be a starting point for such a definition.

We are reluctant to define the word "remote" as it is a relative term and would prefer to review each situation on a case by case basis. As pointed out in the October 1989 Report of the Task Force on Tax Benefits for Northern and Isolated Areas ("Task Force Report"), the measurement and relative weight of each criterion used in a determination of remoteness is arbitrary and works better on a small scale rather than a nation-wide basis. We feel that a case by case approach would allow more scope to considering the most current information available such as he effect of an imminent plant closure on the area affected as well as any other information particular to the area under review.

Nevertheless, it is our view that the use of the word "remote" without a term of reference takes on the meaning of "isolated" or "remote in relation to all other places". While a guideline based on distance would be appropriate in most cases, there may be situations where other relevant factors should also be considered in making such a determination.

We do not think it is appropriate to use the criteria in place for the Northern Residents Deduction to decide whether or not a taxable benefit should be assessed in respect of the reimbursement of removal expenses.

                               21(1)(b)

While the policy objective of encouraging settlement in remote areas may be served by both the Northern Residents Deduction and the position described in the bulletin, the Task Force pointed out that there is a perceived inequity in the definition of a prescribed area in that some prescribed areas are not considered by neighbouring communities as being remote.

Similarly, other communities may be perceived as remote based on extenuating circumstances while not meeting the criteria for being designated as prescribed areas under Regulation 7303 of the Act.

You may be interested to know,chat we have Hot had any queries on whether specific locations are considered remote other than your referral concerning the 24(1) and 24(1) closures.

We trust our comments will be of assistance to you.

Yours truly, B.W. Dath Director Business and General Division Rulings Directorate Legislative and Intergovernmental Affairs Branch