Principal Issues: What does the phrase "maintained at another location a self-contained domestic establishment" in subparagraph 6(6)(a)(i) mean?
Position: Question of fact. The individual must be responsible for the upkeep of its self-contained domestic establishment.
Reasons: Previous positions.
XXXXXXXXXX 2018-078048 I. Landry, M. Fisc. January 29, 2019
Dear Madam,
Subject: Maintaining a self-contained domestic establishment
This letter is in response to your e-mail of September 12, 2018 asking for our interpretation of the phrase "maintained at another location a self-contained domestic establishment as the taxpayer’s principal place of residence” in subparagraph 6(6)(a)(i) of the Income Tax Act (the "Act").
All legislative references herein are to the provisions of the Act.
Our Comments
This technical interpretation provides general comments on the provisions of the Act. It does not confirm the income tax treatment of a particular situation involving a specific taxpayer but is intended to assist you in making that determination. Our Directorate only confirms the tax treatment of particular transactions in the context of an advance income tax ruling request submitted in the manner set out in Information Circular IC 70-6R8, Advance Income Tax Rulings and Technical Interpretations.
Subparagraph 6(6)(a)(i) allows a taxpayer to exclude from the computation of the taxpayer’s employment income an amount received that represents the value of, among other things, the cost of board and lodging (or an allowance not in excess of a reasonable amount for those expenses) in respect of expenses the taxpayer has incurred for the taxpayer’s board and lodging for a period at a special work site, being a location at which the duties performed by the taxpayer were of a temporary nature, if the taxpayer maintained at another location a self-contained domestic establishment as the taxpayer’s principal place of residence. To this end, the self-contained domestic establishment must firstly have been, throughout the period, available for the taxpayer’s occupancy and not rented by the taxpayer to any other person, and secondly, must have been located such that by reason of distance, the taxpayer could not reasonably have been expected to have returned daily from the special work site. Finally, the period during which the taxpayer was required by the taxpayer’s duties to be away from the taxpayer’s principal place of residence, and to be at the special work site or location, could not have been less than 36 hours.
In order for subparagraph 6(6)(a)(i), as well as paragraph 118(1)(b), to apply to a taxpayer, the taxpayer must, in particular, maintain a self-contained domestic establishment. The Act does not specify what it means to maintain a self-contained domestic establishment. It is therefore necessary to refer to the ordinary meaning of that concept.
For the purposes of subparagraph 6(6)(a)(i) and paragraph 118(1)(b), it is our general position that an individual maintains a self-contained domestic establishment if the individual owns or rents a self-contained domestic establishment which is the individual’s principal place of residence and for whose maintenance the individual is responsible, alone or with other persons.
However, there may be other situations where we consider that an individual maintains a self-contained domestic establishment, alone or with others. For example, if an individual is not the owner or tenant of a self-contained domestic establishment (or the co-owner or co-tenant) but pays the expenses of the self-contained domestic establishment on a regular basis because of the individual’s responsibility for the establishment, we are generally of the view that the individual maintains a self-contained domestic establishment. However, to so conclude, the individual must be able to demonstrate that that is the case.
In addition, if an individual is not the owner or the tenant of a self-contained domestic establishment (or the co-owner or roommate) but only contributes to certain expenses of another person who maintains a self-contained domestic establishment, in a random and irregular way, we are generally of the view that the individual does not maintain a self-contained domestic establishment.
The question of whether an individual maintains a self-contained domestic establishment is therefore essentially a question of fact, which requires an analysis of all the facts relevant to a particular situation.
Best regards,
Michel Lambert, CPA, CA, M. Fisc.
Manager
Business and Employment Income Division
Income Tax Rulings Directorate
Legislative Policy and
Regulatory Affairs Branch