1 May 1998 External T.I. 9805385 - SHORT TERM REIMBU EMPLOYE HOME TO WORK

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:

whether an employee is taxed on the benefit of employer assistance with travel to work when seconded to a work place 700 km away & normally allowed to work at home rather than relocate

Position:

in the particular facts presented, yes

Reasons:

travel to employer’s place of business on a weekly basis is still personal even though the employee’s home is also considered a normal place of work for that employee - the exception in 6(6) for special work site would have applied if the employer had paid for the employee’s accommodation at the special work site but in the case presented, they choose to permit the employee to telework from his home except for weekly meetings. Since most of the trips did not require a 36 hr absence, and the employer did not provide accommodation in any event, 6(6) doesn’t apply and the reimbursement of car rental or auto allowance is taxable

XXXXXXXXXX 980538
A. Humenuk

Attention: XXXXXXXXXX

May 1, 1998

Dear XXXXXXXXXX:

Re: Reimbursement of Employee Travel from Home to Employer’s Place of Business

This is in reply to your letter of February 18, 1998, in which you ask whether the reimbursement of a car rental or the payment of a reasonable automobile allowance to an employee will result in a taxable benefit in a particular fact situation.

In the situation you describe, an employee who regularly works in XXXXXXXXXX is temporarily assigned to work for another employer for a period of 6 months. As the office of the other employer is located in XXXXXXXXXX and the employee lives in XXXXXXXXXX, the secondment agreement permits the employee to work from his home most of the time. However, the employee is required to attend meetings in XXXXXXXXXX approximately once a week. The employer reimburses the employee for each trip to XXXXXXXXXX, either by way of an automobile allowance based on the number of kilometres driven between XXXXXXXXXX and XXXXXXXXXX or by way of a reimbursement of the rental of a car.

The confirmation of the tax consequences of a specific transaction is only given by way of an advance income tax ruling, as described in the enclosed Information Circular 70-6R3, Advance Income Tax Rulings dated December 30, 1997, and is restricted to proposed transactions. For assistance in determining the appropriate amount of benefit to be included on the employee’s T4 information slip for the current year or a preceding year, you may wish to submit all the relevant facts to the Ottawa Tax Services Office for their views. Nevertheless, we offer the following general comments which may be of assistance to you.

It is the Department’s position that travel between an employee’s residence and his or her regular place of work is personal. An employee’s regular place of work is usually the location at or from which the employee performs the duties of employment. However, an employee may have more than one regular workplace and that place may change from time to time. If an employee who normally works from home is required to regularly attend staff or other meetings at the employer’s place of business, the employer’s place of business is also considered to be one of the employee’s regular places of work. As a result, travel between such work locations is viewed as personal in nature and a reimbursement or allowance for the employee’s cost of such travel constitutes a taxable benefit pursuant to paragraph 6(1)(a) or (b) of the Income Tax Act (the "Act") unless it can be excluded from income by reason of subsection 6(6) of the Act.

Travel expenses paid by an employer for travel to and from a special work site or remote location are excluded from the employee’s income pursuant to subsection 6(6) of the Act if, among other things, the employee is required to be away from his or her principal place of residence for a period of not less than 36 hours and as a result the employee has received board and lodging or a reasonable allowance in respect thereof from the employer. The enclosed Interpretation Bulletin IT-91R4, Employment at Special Work Sites or Remote Work Locations, explains the meaning of the terms “special work site” and “remote location” and provides additional detail concerning the conditions under which such benefits may be excluded from an employee’s income. However, in the circumstances described in your letter, subsection 6(6) of the Act does not appear to be applicable.

We trust that these comments have clarified our views on this matter.

Yours truly,

P. Spice
for Director
Business and Publications Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch
Attachment