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: Whether a remote mine site premium allowance paid to employees to recognize the unique challenges of working at a remote work site may be excluded from income under subsection 6(6) or elsewhere under the Act.
Position: Allowance not excluded from income based on description provided.
Reasons: Allowance as described is includable in income under paragraph 6(1)(b), unless the allowance is actually in respect of expenses incurred by the employee for board and lodging or transportation to and from the remote work site as required under subsection 6(6), or is in respect to any of the other exceptions described in subparagraphs 6(1)(b)(i) through (xi).
XXXXXXXXXX
2011-041406
M. Allan
January 9, 2012
Dear XXXXXXXXXX :
Re: Remote mine site premium allowance
We are writing in response to your letter of July 12, 2011, regarding the taxation of a remote mine site premium allowance ("premium allowance") paid to employees of a company that operates XXXXXXXXXX remote mines at locations in Canada.
More specifically, you have enquired whether the premium allowance may be excluded from the employees' income under subsection 6(6) of the Income Tax Act ("Act") or any other relevant provision under the Act. The premium allowance is paid in recognition of the unique challenges of the employees working at the remote mines. These challenges can affect their work /life balance and include occasional flight delays due to weather and other issues, as well as absences from home and family for extended periods of time.
Generally, an allowance paid to an employee is subject to tax in accordance with paragraph 6(1)(b) of the Act, unless it falls within one of the specific exceptions listed in the Act.
It is our understanding that the XXXXXXXXXX remote mines of the company meet the criteria of a "remote location" under subsection 6(6) of the Act. The company provides the employees with: board and lodging at the remote mines; transportation to the remote mines from common departure points; and a transportation allowance for travel between the employees' homes and the common departure points. Consistent with document 2008-028022, these amounts have been determined by the company to be exempt from inclusion in the employees' income under subsection 6(6) of the Act.
The premium allowance, as described in your letter, is in addition to amounts noted above and does not appear to be in respect of expenses incurred by the employee for board and lodging nor transportation to and from the remote mines. Therefore, the premium allowance would not fall within the exception provided under subsection 6(6) of the Act. The premium allowance also does not appear to be in respect of any of the exceptions described in subparagraphs 6(1)(b)(i) through (xi) of the Act. There are no other relevant provisions in the Act under which the premium allowance would be exempted from inclusion in income.
Therefore, unless the premium allowance is actually in respect of items described under subsection 6(6) or subparagraphs 6(1)(b)(i) through (xi), the premium allowance is included in the employees' income under paragraph 6(1)(b) of the Act.
We trust these comments will be of assistance.
Nerill Thomas-Wilkinson
Manager
for Director
Reorganizations Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch
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