Principal Issues: [TaxInterpretations translations]
Are the duties of employment performed by an employee hired only to work at a special work site temporary in nature?
Position: Yes, provided that the intention to limit the duration of the work to less than two years is apparent from the outset of the assignment.
Reasons: The fact that the employees start their employment abroad and may be laid off upon their return is not relevant for the purposes of determining whether the work they perform at a XXXXXXXXXX special work site is of a temporary nature.
July 24, 2000
XXXXXXXXXX Tax Services Office Headquarters
P.-A. Sarrazin
(613) 952-5803
Attention: XXXXXXXXXX
2000-003156Temporary Work
I am writing in response to your memo of June 6, 2000, in which you asked for our opinion on the above subject.
The Facts
A company hired employees to work XXXXXXXXXX for a period of XXXXXXXXXX. At the time those employees were hired, the company was unable to determine whether their services will be required following their return to XXXXXXXXXX.
The company will pay those employees a reasonable allowance for board and lodging during their stay in XXXXXXXXXX.
You wish to know whether the employees are considered to be performing work of a temporary nature entitling them to claim tax treatment under paragraph 6(6)(a) of the Income Tax Act (the “Act”). For the purposes of this letter, you asked us to assume that all the other conditions for the application of that paragraph have been satisfied.
Our Comments
Subsection 6(6) of the Act provides that an amount received by an employee that represents the value of expenses (or an allowance not exceeding a reasonable amount in respect of expenses) incurred by the employee for board and lodging is not included in income, in certain circumstances, notwithstanding subsection 6(1).
More specifically, subparagraph 6(6)(a)(i) provides that this exemption applies to the amount received during a period in which the employee works at a special work site that is a place where the work performed by the employee was work of a temporary nature, while maintaining elsewhere and as a principal place of residence, a self-contained domestic establishment. In addition, the period during which the employee's work required the employee to be away from the employee’s principal place of residence or to be at this work site must have been at least 36 hours.
This particular worksite must be a place where the work performed by the taxpayer was of a temporary nature. It must therefore be determined where the taxpayer works and incurs expenses for board and lodging. Next, it must be determined whether the work performed at that location was of a temporary nature.
The fact that employees start their employment abroad and may be laid off upon their return is not, in our view, relevant to determining whether the work they perform at a particular XXXXXXXXXX worksite is temporary in nature.
In our view, the purpose of subparagraph 6(6)(a)(i) is to enable an employee who is required to engage in temporary employment outside the location where the employee’s principal place of residence is located not to be taxed on the allowances the employee receives for board and lodging at the employee’s new place of employment because of the temporary nature of that employment. An individual who has a self-contained domestic establishment in one place cannot be expected to dispose of that establishment and relocate to another place to take up employment that will be temporary in nature.
Paragraphs 5 and 6 of Interpretation Bulletin IT-91R4, Employment at Special Work Sites or Remote Work Locations, state that the temporary nature of the work refers to the duration of the duties performed by the individual employee and that the expected duration of the work is based on facts known at the beginning of the employment such as, among other things, the agreed period of time for which the employee was engaged. Where the duration of a period of assignment to a particular workplace is clearly stated at the outset and this period in fact lasts less than two years, the work is considered to be of a temporary nature.
For more information on this subject, we refer you to our opinion rendered in file 9930467 (also listed as 1999-0008067) available on the Legislative Access Database (LAD).
For your information, a copy of this memorandum will be severed using the Access to Information Act and will be available in the Legislative Access Database (LAD) located on the mainframe of the Canada Customs and Revenue Agency. A severed copy will also be distributed to the commercial tax publishers for inclusion in their databases. The severing process will remove all material that is not subject to disclosure, including information that could disclose the identity of the taxpayer. Should your client request a copy of this memorandum, the Legislative Access Bank version can be provided. Alternatively, the client may request a severed copy using the Privacy Act criteria, which does not remove client identity. Requests for this latter version should be made by you to Ms. Jackie Page at (819) 994-2898. A copy will be sent to you for delivery to the client.
We hope you find these comments to be of assistance.
Ghislain Martineau
for the Director
Business and Publications Division
Income Tax Rulings Directorate