Generally, if you provide a benefit or an allowance for board and lodging, or transportation to your employee, the benefit or allowance is taxable.

Depending on your situation, the board and lodging, or transportation benefit or allowance you provide to your employee who works at a remote work location, may not have to be included in your employee’s income. Where the benefit must be included in your employee’s income, the value of the benefit is based on its fair market value (FMV).

What is the fair market value (FMV)

GST/HST on the taxable benefit

If the benefit is taxable, the value of the benefit may include the GST/HST or PST that you are required to pay. You must also include any PST that would have been payable if you were not exempt. For example, meals, utilities, travel assistance and short-term accommodations may be subject to GST/HST.

On this page

• Steps
• References

Steps

1. Determine if another exception applies to the benefit or allowance

   If you provide a benefit or an allowance for board and lodging or transportation, your employee may be working at a location that is both considered a remote work location and a special work site. However, the benefit can only be excluded from the employee's income once.

   • If the benefit or allowance is provided at a special work site, to review the conditions that must be met to exclude this amount from your employee’s income, do not continue to the next step.

     Refer to: Board and lodging, and transportation - Provided to an employee working at a special work site

   • If the benefit or allowance is provided at a remote work location, to review the conditions that must be met to exclude this amount from your employee’s income, continue to Step 2 - Determine if the work location is considered remote.

2. Determine if the work location is considered remote

   You have to determine if the work location is considered a remote work location.

   What CRA generally considers to be a remote work location

   Generally, the CRA considers the work location to be remote when it is 80 kilometres or more, by the most direct route normally travelled, from the nearest established community with a population of at least 1,000 people.

   A location is considered an established community if it has essential services or those services are available within a reasonable commuting distance.

   What are essential services

   Essential services may include access to:

   • Basic food store
   • Basic clothing store, with merchandise in stock (not a mail-order outlet)
   • Accommodation
   • Certain medical services
   • Certain educational facilities

   To determine if the work location is remote from an established community, the following factors will generally be considered:

   • The availability of transportation.

   • The distance between the remote work location and the nearest established community.

   • The time required to travel the distance.

   Special situation - Fishers and seafarers

   In certain situations, a ship or vessel may qualify as a remote work location if it is at sea for 36 hours or more because of the combination of the ship or vessel being a workplace and its physical or geographical location.

   Time spent at sea may include time on board due to:

   • Quarantine
   • Waiting to dock
   • Loading or unloading cargo when the ship is in transit and is only in port for a very short period of time before it sets sail again
   • Waiting for immigration or customs clearance

   However, once the ship is docked and your employee is free to leave the ship (not including the exceptions above), the ship is no longer considered to be ‘at sea’ and does not qualify as a remote work location.

   Determining if the ship qualifies as a remote work location for your employee depends on the facts of each situation. Each case is unique and requires a thorough review of the facts.

   
   

   • If the work location is not considered remote, continue to Step 4 - Calculate the value of the benefit.

   • If the work location is considered remote, continue to: Step 3 - Determine if the benefit or allowance must be included in your employee’s income.

3. Determine if the benefit or allowance must be included in your employee’s income

   Generally, if you provide a benefit or an allowance for board and lodging, or transportation to your employee, you need to include the value of the benefit or allowance in your employee’s income.

   Depending on your situation, if the benefit or allowance is provided to your employee working at a remote work location, the amount may be excluded from your employee’s income under the Income Tax Act (ITA).

   1. Benefit or allowance: Board and lodging
      

      If you provide for board and lodging or an allowance (not more than a reasonable amount) for board and lodging to your employee who works at a remote work location (step 2), the value of the board and lodging or allowance can be excluded from their income if all of the following apply:

      • The board and lodging or allowance (not more than a reasonable amount) is provided for a period of at least of 36 hours and one of the following applies:
        
        • Your employee had to be away from their principal place of residence because of their employment duties
        • Your employee had to be at the remote work location
      • Your employee could not reasonably be expected to set up and maintain a self-contained domestic establishment (SCDE) because of the remoteness of the location and the distance from any established community.
      • You did not provide a SCDE for your employee.
      What is a SCDE
      

      A SCDE is a house, an apartment, or other similar place of residence where a person usually sleeps and eats.

      It is generally a living unit with restricted access that contains a kitchen, bathroom, and sleeping facilities. The SCDE must be separate from any other living unit in the same building.

      • If all of the above conditions are not met, the benefit or allowance for board and lodging must be included in your employee’s income.

        Continue to: Step 4 - Calculate the value of the benefit.

      • If all of the above conditions are met, the benefit or allowance for board and lodging is excluded from your employee's income.

        If you also provided a benefit or an allowance for transportation to your employee, continue to: Step 3b - Transportation benefit or allowance you provide to your employee.

   2. Benefit or allowance: Transportation
      

      If you provide transportation or an allowance (not more than a reasonable amount) for transportation to your employee who works at a remote work location (step 2), the benefit or allowance can be excluded from their income if all of the following apply:

      • Your employee’s duties required them to be away from their principal place of residence or be at the remote work location for a period of at least 36 hours.
      • The transportation was provided in a period during which you (or a third party) provided your employee with board and lodging or a reasonable allowance for board and lodging.
      • The transportation must be between one of the following:
        

        • Remote work location in Canada

          Between the remote work location in Canada and any location in Canada

        • Remote work location outside Canada

          Between the remote work location outside Canada and any location in Canada or any location in the country in which your employee is employed

      • If all of the above conditions are not met, the benefit or allowance must be included in your employee’s income.

        Continue to: Step 4 - Calculate the value of the benefit.

      • If all of the above conditions are met, the benefit or allowance is excluded from your employee’s income.

        You do not need to do any calculations.

        Do not complete Form TD4, Declaration of Exemption – Employment at a Special Work Site because this form is only used for employees working at a special work site.

        Do not continue to the next step.

4. Calculate the value of the benefit

   If the benefit is taxable, the value of the benefit is equal to:

   Board and lodging

   • FMV of the board and lodging, including any applicable GST/HST and PST
   • minus Any amounts your employee reimbursed you
   • equals Value of the benefit for board and lodging to be included on a T4 slip using code 30 and box 14 (or code 028 on a T4A slip if you are not the employer of the employee)

   Transportation

   • Value of the transportation, including any applicable GST/HST and PST
   • minus Any amounts your employee reimbursed you
   • equals Value of the benefit for transportation to be included on the T4 slip using code 40 and box 14 (or code 028 on a T4A slip if you are not the employer of the employee)

   If you provided a taxable allowance, the value of the benefit is the amount of the allowance.

   The amounts must be included in the pay period they were received or enjoyed.

5. Withhold payroll deductions and remit GST/HST

   The withholding and remitting requirement depends on the type of remuneration: cash , non-cash , or near-cash .

   If the benefit is taxable, you must withhold the following deductions:

   • Non-cash and near-cash: Option 1

     Withhold:

     • Income tax
     • CPP
     • EI (do not withhold unless cash earnings were also paid in the pay period)

     Remit:

     • GST/HST in certain situations

   • Cash: Option 2

     Withhold:

     • Income tax
     • CPP
     • EI

     Do not remit:

     • GST/HST (do not remit)

   The amounts must be included in the pay period they were received or enjoyed.

   Learn how to calculate deductions and the GST/HST to remit: How to calculate - Calculate payroll deductions and contributions

6. Report the benefit on a slip

   If the benefit is taxable, you must report the following on a T4 or T4A slip:

   • T4 slip - Employer

     • Non-cash and near-cash: Option 1

       • Box 14 - Employment income
       • Box 26 - CPP/QPP pensionable earnings
       • Code 30 - Board and lodging
       • Code 40 - Other taxable allowances and benefits, including transportation

     • Cash: Option 2

       • Box 14 - Employment income
       • Box 24 - EI insurable earnings
       • Box 26 - CPP/QPP pensionable earnings
       • Code 30 - Board and lodging
       • Code 40 - Other taxable allowances and benefits, including transportation

   • T4A slip - Payer

     • Code 028 - Other income, Total amount of board, lodging and transportation

   Learn how to report the benefit on a slip: Fill out the slips and summaries - File information returns (slips and summaries)

References

Legislation