N. R. Mitchell (613) 957-2139
May 7, 1986
Dear XXXX
Re: Special Work Site
This is in reply to your letter of January 27, 1986 concerning the application of subsection 6(6) of the Income Tax Act (the "Act") in a given set of circumstances. We regret the unavoidable delay in replying.
You have presented us with the following facts.
1. XXXX 2. XXXX 3. XXXX 4. XXXX 5. XXXX 6. XXXX 7. XXXX
It is your view that the income reported on the W2 statement need not be included in the individual's income for the purposes of Canadian income tax because of the application of the relieving provisions set out in paragraph 6(6)(a) of the Act. As you see it, the amount in question constitutes a benefit or allowance received for board and lodging which is a reasonable amount, the "special work site" at which be resided was of sufficient distance that it was impossible for him to return (on a daily basis) to his ordinary place of residence, and the duties performed by the individual were of a temporary nature.
As you may be aware, subsection 6(6) of the Act has recently been amended. The Act now provides that where a taxpayer performs duties of a temporary nature at one location, which duties require him to be away for a period of not less than 36 hours from another location where he maintained a self-contained domestic establishment as his principal place of residence, the temporary work location can be considered a "special work site". This is subject to the following two conditions. First, the taxpayer's principal place of residence must have been, throughout the period that he performed his duties at the temporary work location, available for his occupation and not rented by him to any other person. Second, the distance between the principal place of residence and the temporary work location must be such that the taxpayer could not reasonably be expected to have commuted daily between the two. (The distance between XXXX and any location in Canada is clearly sufficiently great to satisfy this second requirement).
If all of the requirements explained above can be satisfied in the situation with which you are concerned would agree that the value of the excess costs incurred by the XXXX to maintain the apartment provided to the employee need not be included in the employee's income. However, with respect to the allowance provided to the employee, it is our view that these amounts would not be exempted from the recipient's income pursuant to subsection 6(6) of the Act. That subsection allows an exclusion from income of allowances received by an employee only where the allowance is in respect of the employee's expenses incurred by him for his board and lodging at a special work site (or remote location) or for the transportation expenses identified in paragraph 6(6)(b) of the Act. Your letter indicates that the allowance received by the employee in the situation under consideration was for the purpose of compensating the individual for the fact that he was required to incur all living expenses in U.S. dollars. Accordingly, we must conclude that this allowance was in respect of a broader range of expenses incurred by the employee than is contemplated by subsection 6(6) of the Act.
We would add that in order to claim an exemption under subsection 6(6) of the Act, the taxpayer and his employer should complete a copy of form TD4, "Declaration of Exemption - Employment at Special Work Site."
We hope this letter will be of assistance to you.
Yours truly,
ORIGINAL SIGNED BY ORIGINAL SIGNÉ PAR P.D. FUOCO for Director Small Business and General Division Specialty Rulings Directorate Legislative and Intergovernmental Affairs Branch