6 October 1997 Internal T.I. 9726287 - COMMUTING ALLOWANCE

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:

General comments on taxation of commuting allowance.

Position:

Taxable under 56(1)(m) and 56(1)(a)(iv).

Reasons:

Such benefits under National Training Act, Unemployment Insurance Act and Employment Insurance Act are not exempted from income tax.

			October 6, 1997

	SUDBURY TAX CENTRE	HEADQUARTERS
B. H. Dawe	P. Spice
	Interim Director			(613) 957-8953

	Attention: Ms Sharon Ferguson
	             Appeals
			972628

Commuting Allowance

This is further to our telephone conversation of September 30, 1997 (Spice/Ferguson), in which you requested our written comments concerning the tax treatment of a commuting allowance received by an individual under the Employment Insurance Act.

We have not reviewed the particular provision of the Employment Insurance Act or Regulations which authorizes the payment of a commuting allowance but can provide our general comments on this issue with respect to three of the federal statutes under which such allowances might be payable.

A benefit received under the authority of the Employment Insurance Act is brought into the recipient's income pursuant to subparagraph 56(1)(a)(iv) of the Income Tax Act (the "Act") except if the benefit relates to the cost of certain courses or programs. (It is proposed by the Department of Finance that a reference to the Unemployment Insurance Act be added to this provision.) Therefore, a commuting allowance, if paid under the provisions of either of these two statutes, is included in the recipient's income.

The tax treatment of training allowances paid under the authority of the National Training Act (the "NTA") is governed by paragraph 56(1)(m) of the Act. This provision requires the inclusion in income of any training allowances paid under the NTA except those paid on account of personal or living expenses while living away from home. A commuting allowance payable under the NTA is not considered to be an allowance for living away from home. Implicit in the nature of a commuting allowance is the presumption that an individual is not required to live away from home but can commute daily. Consequently, a commuting allowance received under the NTA is required to be included in the recipient's income.

We trust this information will assist.

for Director
Financial Industries Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch