Principal Issues: Whether the distance driven by an employee between a special work site or remote work location and his or her principal place of residence, are considered personal use for the purpose of computing a standby charge and operating benefit in respect of an employer-provided vehicle?
Position: No, provided all the conditions specified under subsection 6(6) are met.
Reasons: Where all the conditions set out in subsection 6(6) are met transportation benefits or allowances in respect of expenses incurred for travel between an employee's principal place of residence and a special work site or remote work location are also excluded from employment income, this includes for the purposes of computing a standby charge and operating benefit.
XXXXXXXXXX 2005-016499 Tim Fitzgerald, CGA May 25, 2006
Dear XXXXXXXXXX,
This is further to your letter of December 20, 2005, wherein you requested our opinion regarding the use of employer-provided vehicles driven by employees between their homes and certain work locations in the situation described below. We apologize for the delay in responding.
We understand the facts to be as follows:
- The employer's main office is situated in XXXXXXXXXX, Alberta.
- There are several work locations to which employees report.
- The principal place of residence for each employee is XXXXXXXXXX, Alberta.
- The work locations are considered to be of a temporary nature and employees move locations as each job is completed.
- The employees work XXXXXXXXXX shifts and receive employer-provided board and lodging benefits while at the work locations.
- The employees do not report to work at the employer's XXXXXXXXXX office.
- Each employee goes directly from his or her principal place of residence to the work location at the start and end of his or her XXXXXXXXXX-day shift.
You have asked whether the distance driven by each employee between his or her principal place of residence and the work locations in an employer-provided vehicle is personal or business use for the purposes of computing a standby charge and operating benefit.
Our Comments
You have asked for our views concerning what appears to be a factual situation involving specific taxpayers. As explained in Information Circular 70-6R5 issued by the Canada Revenue Agency (the "CRA"), it is not this Directorate's practice to comment on proposed transactions involving specific taxpayers other than in the form of an advance income tax ruling. Although we are unable to provide any binding assurance with respect to the interpretation requested, we offer the following general comments for your information.
Generally, the value of employer-provided board and lodging and transportation to and from work are included in the employee's income under the rules in subsection 6(1) of the Income Tax Act. However, by virtue of subsection 6(6), an exception to these rules is provided in limited circumstances in respect of employment at a "special work site" or "remote work location".
For the "special work site" exclusion to apply:
(a) the employee must have worked at a location at which the duties performed by the employee were of a temporary nature (as a general rule, duties will be considered of a temporary nature if it can reasonably be expected that they will not provide continuous employment at a work location beyond a period of two years);
(b) the employee maintained at another location, a self-contained domestic establishment as the employee's principal place of residence:
(i) that was, throughout the period, available for the employee's occupancy and not rented by the employee to any other person, and
(ii) to which, by reason of distance, the employee could not reasonably be expected to have returned daily from the work site; and
(c) the period while the employee was required by his or her duties to be away from the employee's principal place of residence, or to be at the work site, was at least 36 hours (the period of at least 36 hours may include time spent travelling between the employee's principal place of residence and the work site).
For the "remote work location" exclusion to apply:
(a) the employee must have worked at a location which by virtue of its remoteness from any established community, the employee could not reasonably be expected to establish and maintain a self-contained domestic establishment; and
(b) the period while the employee was required by his or her duties to be away from the employee's principal place of residence, or to be at the work location, was at least 36 hours.
Interpretation Bulletin IT-91R4 - Employment at Special Work Sites or Remote Work Locations, should be consulted for more detailed information, including the Canada Revenue Agency's views regarding the terms "self-contained domestic establishment" and "principal place of residence", and whether duties are of a "temporary nature".
If the special work site or remote work location exclusion applies to an employee, transportation benefits or allowances in respect of expenses incurred for travel between the employee's principal place of residence and the special work site or remote work location are also excluded from employment income. In our view, this would include transportation benefits derived from use of an employer-provided automobile for travel between the employee's principal place of residence and a special work site or remote work location. Such distance would be considered travelling in connection with or in the course of the employee's office or employment for the purposes of computing a standby charge and operating benefit.
We trust our general comments are of assistance.
Yours truly,
Randy Hewlett, B.Comm.
Section Manager,
Business and Partnerships Division
Income Tax Rulings Directorate
Legislative Policy & Regulatory Affairs Branch