McEachern – Tax Court of Canada finds that the first leg of travel to a remote work location did not qualify for exclusion under s. 6(6)(b)(ii)

An employee, who worked two weeks out of every four at a norther diamond mine, received an allowance of 4.5% of his salary to help him to pay the costs of transportation between his New Brunswick residence and the Edmonton site for boarding or deboarding his flights to and from the mine. Masse DJ found that the allowance was includible in the employee's income under s. 6(1)(b), because it was not excluded under s. 6(6) for three alternative reasons:

• The s. 6(6)(b) exclusions were not available on substantive grounds because he regarded the travel between home and Edmonton as something separate from travel to and from the special work site (s. 6(6)(b)(i)) or remote location (s. 6(6)(b)(ii)). [This seems odd as presumably there could have been an exempt allowance if the employee instead had received a larger allowance to make it on his own steam all the way to and from the remote work site.]
• The employer had not provided a TD4 certifying that the s. 6(6)(b)(i) exclusion was available. After referencing the jurisprudence on s. 8(10), Masse DJ found that it was necessary for the taxpayer to demonstrate that the employer had been acting unreasonably in not providing the certification - and in fact its refusal was reasonable, as the “Allowance of 4.5% of salary was arbitrary and bore no resemblance at all to the actual costs involved in travelling between the Appellant’s principal residence and Edmonton.” [He earlier noted that the employee’s actual travel costs were approximately double the allowance amount. The fact that there was no provision like s. 8(10) requiring an employer certification seemed to help the taxpayer’s rather than the Crown’s position.]
• “The travel between New Brunswick and Edmonton, AB were essentially personal in nature since he chose to maintain his principal place of residence in another province. It has long been established that expenses related to travel from one’s residence to one’s work site are personal expenses.” [S. 6(6) states that it applies notwithstanding s. 6(1) and, therefore, overrides this jurisprudence.]

Neal Armstrong. Summary of McEachern v. The Queen, 2018 TCC 232 under s. 6(6)(b).