A trucking company pays its employed long-haul drivers allowances for accommodation expenses of $0.04 per kilometer (scenarios 1 and 3) or of $75 per day spent away (scenario 2). (In scenario 3, they also receive wages of $0.36 per kilometre.) The employees each sleep in the truck’s cab as a security measure, so that no expenses are generally incurred by them for accommodation – but their meal expenses, amounting to around $40 per day, are approximately twice the allowance amounts in scenarios 1 and 3 based inter alia on assumptions as to the number of kilometres travelled. Would the allowances received be considered as reasonable and, therefore, excluded from employment income under s. 6(1)(b)(vii)? CRA responded:
[T]ravel expenses include food, beverage and accommodation costs. In addition… the costs of showers are also considered to be deductible as accommodation expenses where a transport employee sleeps in the cab of the truck rather than in a hotel. …
[A]n allowance for accommodation expenses calculated exclusively on the basis of distance, time or other criteria will not be considered reasonable if it does not represent an estimate of the cost of accommodation that may be incurred by the employee during the travel that generated entitlement to the allowance. …
[W]here an employee sleeps in the truck cab, it is unlikely that the allowances for accommodation expenses in the three scenarios provided will be considered reasonable for the purposes of paragraph 6(1)(b).