14 November 2007 External T.I. 2007-0224441E5 - Special Work Site Exclusion

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 the exclusion under subsection 6(6) of the Act on employment at a special work site would apply.

Position: General comments only.

Reasons: Question of fact. We don't have specific details on each employee.

XXXXXXXXXX 							2007-022444
								Michael Cooke
November 14, 2007

XXXXXXXXXX:

Re: Subsection 6(6) of the Income Tax Act ("the Act")

We are writing in response to your electronic correspondence of February 14, 2007 concerning the above-noted provision of the Act.

In your correspondence you indicate that your company carries on the business of XXXXXXXXXX in Canada. You also indicate in your correspondence that your company currently has a work site that is located near a small town (population less than 1,000) that has little, if any, suitable short-term rental accommodations available for its workers. As such, your company has rented XXXXXXXXXX apartments that are made available to its employees who are assigned to work at the work site. In addition, you also indicate that your company provides vehicles to these employees since suitable transportation to, from and around the work site is not available. You indicate that the value of the rental accommodations and vehicles provided by the company to its employees have historically been reported as taxable benefits on their respective T4s.

You have referred us to the conditions described in subsection 6(6) of the Act in respect of the worksite and the comments in IT-91R4, "Employment at Special Worksites or Remote Work Locations", as support for your view that the value of such benefits should be excluded from the T4s of the affected employees. As such, you have requested our comments.

The particular fact situation outlined in your correspondence appears to involve completed transactions between the company and specific taxpayers who have not otherwise been identified. This Directorate does not provide written interpretations involving completed transactions since, as mentioned in paragraph 22 of Information Circular IC 70-6R5, "Advance Income Tax Rulings", dated May 17, 2002, such requests should be made in writing to the appropriate Canada Revenue Agency ("CRA") tax services office ("TSO"). Notwithstanding the foregoing, we are prepared to provide the following general comments.

Board and Lodging

Paragraph 6(6)(a) of the Act excludes from the income of an employee the value of, or a reasonable allowance received in respect of, the employee's board and lodging for a period during which the employee performs duties at a "special work site" or "remote work location".

In respect of a "special work site" the duties performed by the particular employee must be of a temporary nature (i.e. generally less than a two-year period); and the particular employee must have a permanent residence available at another location throughout the work period to which he or she could not reasonably be expected to return on a daily basis due to the distance between the special work site and the permanent residence.

In respect of a "remote work location", the particular work location must be so remote from any established community that the taxpayer would not reasonably be expected to establish and maintain a self-contained domestic establishment at that location.

For either the "special work site" or "remote work location" exemptions to apply, the period of time during which the particular employee was required by the duties of employment to be away from the principal residence or be at the special work site or at the remote work location must be not less than 36 hours.

In your situation, it is not clear whether the particular work site in question would qualify as a "remote work location" and questions concerning whether a particular work site would qualify as a "remote work location" should be referred to officials of the local TSO as they will be in a better position to consider all the relevant facts. However, assuming a particular employee was required by the duties of employment to be away from the principal residence or be at the special work site for a period not less than 36 hours and provided all the other conditions described in subparagraph 6(6)(a)(i) of the Act are met, the particular work site described in your correspondence would qualify as a "special work site".

Transportation

Paragraph 6(6)(b) of the Act provides that an employee who, for a particular period of time, receives subsidized board and lodging at a special work site (or a reasonable allowance in respect of board and lodging) will not be required to include in income the value of (or a reasonable allowance received in respect of), free or subsidized transportation between the employee's principal place of residence and the special work site during that period. However, any subsidy or allowance relating to other personal travel will not be excluded from income under paragraph 6(6)(b) of the Act. For more information on the personal use of an employer-provided motor vehicle please refer to IT-63R5, "Benefits, Including Standby Charge for an Automobile, from the Personal Use of a Motor Vehicle Supplied by an Employer - after 1992".

Paragraph 6(6)(b) of the Act also provides that an employee who, for a particular period of time, receives subsidized board and lodging at a remote work location (or a reasonable allowance in respect of board and lodging) will not be required to include in income the value of (or a reasonable allowance received in respect of), free or subsidized transportation during that period, regardless of whether the travel is for personal or employment purposes.

To facilitate the process of claiming the exemption in subsection 6(6) of the Act, the employee should complete Form TD4 and have it certified by the employer. If the employer has any particular questions concerning the correctness of statements on the form the employer should contact the local TSO for assistance. You may also want to refer to Chapter 3 of CRA Guide T4130, "Employers' Guide - Taxable Benefits," which can be obtained from our website www.cra-arc.gc.ca.

We trust that our comments will be of assistance.

Yours truly,

Renée Shields
for Director
Business and Partnerships Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch