7 December 2021 Roundtable, 2022-0923181C6 - TEI Question 5 - Regulation 102

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: Would the CRA consider issuing specific guidance on the meaning of reporting for work at an establishment of the employer to cover an employee working full or part time from home?

Position: The meaning of “reporting for work at an establishment of the employer” is currently under study by the CRA.

Reasons: Guide T4001, Employer's Guide (Payroll Deductions and Remittances).

2021 Tax Executives Institute
Annual Virtual Liaison Meeting

Question 5 – Regulation 102

Pursuant to Paragraph 102(1) of the Income Tax Regulations, employers are required to withhold tax on any payment of remuneration made to an employee where the employee reports for work at an establishment of the employer. If an employee does not report to work to any establishment, the employer is required to withhold where the payment is made. The terms “report to work” is not defined in either the Income Tax Regulations or the Income Tax Act.

The CRA, in its Technical Interpretation 2015-0620821I7, made similar comments with respect to the expression “reports for work”, which can be found in paragraph 102(1) of the Income Tax Regulations. The CRA stated in the technical interpretation:

The CRA has not established any specific criteria for purposes of determining whether an employee reports for work at an establishment of the employer. However, we can clarify that the physical presence of the employee at a location for purposes of carrying out his or her regular duties is an important factor to take into account in establishing whether the employee does or does not report for work at an establishment of the employer. This location will generally be one where the employee produces reports or analyses and receives direction or information on the tasks he or she must perform.

It is important to note that even though an employee is not required to carry out his or her tasks at an establishment of the employer on a daily basis, this will not in itself exclude the possibility of this location being considered an establishment to which the employee reports for work. However, in our view a recurring physical presence for purposes of carrying out the tasks assigned remains necessary in this regard. Generally, the CRA will consider a weekly presence for the equivalent of one typical work day of an employee at the employer's establishment for purposes of carrying out the employee's normal workload to be sufficient to reach the conclusion that the employee reports for work at the employer's establishment. However, an employee whose only physical presence at the employer's establishment is limited to attending a few meetings or information sessions in the course of a given year will not be considered to report for work there.

The CRA’s Guide T4001, Employers’ Guide – Payroll Deductions and Remittances, states:

If your employee reports to your establishment in person, the employee’s province or territory of employment is the one in which your establishment is located. There is no minimum amount of time the employee must report to that place….

Example 3 Your employee works from a home office in Alberta, but occasionally must report to your Alberta office. You pay your employee from your head office in Ontario. Use the Alberta Payroll Deductions Tables since the employee sometimes reports to your Alberta office….

If your employee does not have to report to your establishment in person (for example, the employment contract says the employee works from a home office), the employee’s province or territory of employment is the one from where your employee’s salary and wages are paid.

In interpretation letter 12-016413-001, Revenue Québec made the following comments on the meaning to be given to the expression “reports to work”:

Revenu Québec considers that the expression “presents itself” has a physical connotation. This implies that the employee must physically report to an establishment of his employer. We are of the opinion that this physical presence must have a recurring nature in that an employee who has limited contact with an establishment of his employer does not appear there.

In a 2018 Round Table, Revenue Québec added the following to the interpretation of terms “report to work”: (free translation)

Like the CRA, Revenu Québec is of the opinion that a weekly presence of 7 hours, equivalent to a typical work day, is sufficient to conclude that an employee reports to an establishment of the employer. However, Revenu Québec is also of the opinion that the number of hours could be less without necessarily concluding that the employee does not report to an establishment of the employer. This is why Revenu Québec considers it reasonable to reduce the criterion of the typical working day to half a working day, i.e. more than 4 hours per week.

Thus, to be considered as reporting to his employer's establishment, an employee must physically present himself there on a recurring basis. To this end, an employee would be considered to report to his employer's establishment on a recurring basis if he attended a half-day of work per week, i.e. more than 4 hours.

On the other hand, when the employee does not meet the half-day criterion during all work weeks, but meets it for at least 90% of his time, he will still be considered to report to his employer's establishment. if, for the weeks of work in which he does not meet this criterion, it was justified (question of fact). For example, the employee works for his employer abroad or takes training outside his employer's establishment.

Many employers have amended their work-home policy during the pandemic. Therefore, these employers now allow employees to work from home on a full or part-time basis.

Question

Would the CRA consider issuing specific guidance on the meaning of reporting for work at an establishment of the employer to cover an employee working full or part time from home?

CRA Response

The meaning of “reporting for work at an establishment of the employer” is currently under study by the CRA.

Pierre Girard / Marie-Claude Routhier
2022-092318
December 7, 2021