7 December 1991 Income Tax Severed Letter - Remote or special work sites

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.

XXX

Remote or Special Work Sites

This is in reply to your memorandum dated December 9, 1991 wherein you requested that we review your draft response to the XXX. You have also asked that we disregard your previous request dated November 7, 1991.

As discussed during our telephone conversation of December 13, 1991 (Vanasse/Zion), we are unable to determine whether the individuals working at the XXX work site are either working at a special work site within the meaning of subparagraph 6(6)(a)(i) of the Income Tax Act (the "Act") or working at a remote work location within the meaning of subparagraph 6(6)(a)(ii) of the Act due to the lack of information available to us. The final determination as to the type of work site has become relevant in this particular situation since, unlike the situation in which an employee is working at a remote work location, non-taxable board and lodging received by an employee working at a special work site reduces the employee's otherwise available deduction under subsection 110.7(1) by virtue of subsection 110.7(2) of the Act.

We understand that your division will not prepare a general response to the XXX without attempting to make a final determination as to whether the XXX work site is a special work site or a remote work location. In addition, you have mentioned that you will be requesting from the appropriate district office that they gather the relevant facts needed to make a final determination.

Our Comments

Further to our December 13, 1991 telephone conversation, you have asked that we provide general comments as to whether the XXX work site may be considered a remote work location for purposes of subparagraph 6(6)(a)(ii) of the Act rather than a special work site.

General Rule

A remote work location is a location at which, by virtue of its remoteness from an established community, the taxpayer could not reasonably be expected to establish and maintain a self-contained domestic establishment. As mentioned in paragraph 11 of Interpretation Bulletin IT-91R3, a work location will be considered to be remote if the nearest established community with a population of 1,000 or more is no closer than 80 kilometres by the most direct route normally travelled in the circumstances. The term "established community", as stated in paragraph 12 of the aforementioned bulletin, is considered to mean a body of people who reside in the same locality and who are permanently settled in that location.

A self-contained domestic establishment is defined in subsection 248(1) of the Act as being a dwelling house, apartment or similar place of residence in which place a person as a general rule sleeps and eats. It does not include a bunkhouse, dormitory, hotel room or rooms in a boarding house. A residence is considered to be a self-contained domestic establishment if it is a living unit with restricted access that contains a kitchen, bathroom and sleeping facilities.

XXX

When considering this general rule and its specific application to the XXX work site one must consider:

• 1) whether there is an established community, as defined in paragraph 11 of IT91-R3, at which the taxpayer can reasonably be expected to establish and maintain a self-contained domestic establishment. If there is such a community, the XXX work site could not be considered a remote work location for purposes of subparagraph 6(6)(a)(ii) of the Act. However, the site may be considered a special work site if the specific requirements of subparagraph 6(6)(a)(i) of the Act are met.
• 2) that in the absence of an established community as mentioned in (1) above, can the XXX work site itself be considered to be an established community where the taxpayer can reasonably be expected to establish and maintain a self-contained domestic establishment.

Therefore, when determining whether the XXX work site is a remote work location, because of the absence of an established community as mentioned in (1) above, we must firstly ascertain whether there is an element of permanence to this "community" or whether, for example, the XXX intends to move or close the work site after completing the project. Evidence of the XXX work site being a temporary work site would be one factor, among others, indicating that the site cannot be considered an established community. The availability of community services, transportation and housing are obviously critical elements in determining the existence of an established community.

Secondly, in addition to this aspect of permanency to the community (i.e. site), it must then be determined whether an individual can reasonably be expected to establish and maintain a self-contained domestic establishment for his or her family on this work site.

Draft Response

We are reluctant to make specific comments on your draft response since, as mentioned previously, you will be re=writing a more general response to the XXX. However, there are two statements in Appendix A of your draft response that seem unclear.

XXX paragraph 6(6)(b) of the Act excludes from a taxpayer's income any amounts received or enjoyed by him or any allowance in respect of expenses incurred by him in respect of transportation between the taxpayer's principal place of residence and the special work site.

XXX

Secondly, the third paragraph is somewhat confusing to the reader. It appears the object of this paragraph is to explain the rules where the ordinary place of residence and special work work site are both located in a designated area. If so, we suggest that the first sentence of the paragraph be re-worded to reflect this fact.

In addition, your final response should make specific references to the applicable provisions of the Act and we would suggest that you specify that your comments pertaining to section 110.7 of the Act include the amendments contained in Bill C-18.