23 June 1999 External T.I. 9914105 - SPECIAL WORK SITE

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: Correction of prior opinion # 990160 stating that subsection 6(6) allowances are not subject to Employment Insurance premiums.

Position: Subsection 6(6) benefits are insurable even though it is excluded from income. If no cash earnings are received by the employee for the same period, the benefit is not insurable.

Reasons: Regulation paragraph 3(a) of the Insurable Earnings and Collection of Premium Regulations, which came into force on January 1, 1997. Previously, under subsection 3(1)of the Unemployment Insurance Act Regulations, allowances excluded from income under 6(6) of the Income Tax Act were excluded from insurable earnings.

XXXXXXXXXX 	5-991410
		David Shugar
Attention: XXXXXXXXXX 

June 23, 1999

Dear XXXXXXXXXX:

Re: Employment at Special Work Site

In a letter dated March 11, 1999 (our file number 5-990160), which was in response to your letter of January 21, 1999, the Department gave an opinion with respect to the application of subsection 6(6) of the Income Tax Act (the “Act”) to allowances for board and lodging paid to stage managers. You also requested our opinion on whether the allowances were subject to Canada Pension Plan (CPP) and Employment Insurance (EI) premiums.

In that letter, our view was that EI premiums did not have to be deducted from the value of employer-provided board and lodging or from a reasonable allowance the employee received for board and lodging, if the amount was eligible for exemption from income under subsection 6(6) of the Act. It has been brought to our attention that our comment was in error.

In our view, employer-provided board and lodging, and allowances for board and lodging that are eligible for exemption under paragraph 6(6)(a) of the Act, are insurable and therefore subject to EI premiums, even though the amounts are excluded from income for income tax purposes. However, if the employer provides board and lodging and no cash earnings are received by the employee for the same period, the benefit is not insurable.

Regarding CPP, our view remains that the allowances are not subject to CPP premiums.

We apologize for any inconvenience that our previous comments may have caused.

Yours truly,

Roberta Albert, CA
for Director
Business and Publications Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch