The Money Mustache Community
Around the World => Canada Discussion => Topic started by: max9505672 on December 16, 2019, 04:25:39 PM
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Hi all,
I am in a pretty particular situation and would need support to make sure I properly understand the taxes requirements for my situation, OR suggestions on which professional to consult on this subject?
So, I work for a company in QC as a Site Supervisor which means my job is to work away from the office for 20 days / month on a work site in BC. I then come back home in QC for 10 days off and then start it over again. My company pays me a daily Living Out Allowance (LOA) for the days I am away (it covers my rent of an apartment in the town where my work site is, my meals, daily expenses, etc.).
I have always been under the impression that those allowances weren’t taxable. This what pretty much everybody I work with is saying, but I feel nobody really dug into it. According to what I found on CRA’s website, everybody might be wrong:
Employee at a Special work site
An employer can exclude from income the value of board and lodging, or the reasonable allowance for board and lodging, if all the following conditions are met:
1) The employee’s duties required them to be away from their principal place of residence.
2) The work at the special work site was of a temporary nature.
3) The employee kept, at another location, a self-contained domestic establishment as his or her principal place of residence which:
Was available for the employee’s occupancy, and the employee did not rent it to any other person; and
Due to distance, the employee could not reasonably be expected to return daily from the special work site.
4) The employee had to be away for a period of at least 36 hours. This period can include time spent travelling between the employee’s principal place of residence and a special work site.
If the conditions are met, a TD4 form (Declaration of Exemption) must be completed. The result is that the benefit is excluded from the employees T4.
My question is regarding point 2) : temporary nature
6. The term “temporary” is not defined in the Income Tax Act. However, as a general rule, duties will be considered to be of a temporary nature if it can reasonably be expected that they will not provide continuous employment beyond a period of two years.
I am supposed to be there for more than 2 years, on and off (20 days in / 10 out). My understanding is that my LOA might be taxable, which makes a big big big difference for me. Do I have the right understanding? Or does the in and out makes it non-continuous?
Reference : www.canada.ca/en/revenue-agency/services/forms-publications/publications/it91r4/archived-employment-special-work-sites-remote-work-locations.html
Thanks
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Not an expert in this, but I think continuous would imply that you are at the worksite for 2 straight years, you are not in this case as you are only there 20 days at a time. If you were posted permanently at the site for 2 or more years, then it would be reasonable to expect you to give up your primary residence, this is not something you can do if you are fly in fly out.
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Did you find out more?
I think that the tempoary nature of it is to highlight the impracticality of a person moving to the job site to complete the role. If you worked across several jobsites over the year (even if the primary project goes on for several years, you aren't full time there), or if you are only there for a few months, it would not be taxable -- like hotel costs.
If it were feasible that a person would move to the job site location (or nearby) for their primary residence, then having a second place to live would be a taxable benefit... Think of it this way -- what if you are living near the project site for 21 days a month, and only have a vacation cabin as your other property -- would not the CRA think of your job site location as the defacto primary location, and $$ paid to give you a residence are taxable?
If you are working at a remote camp (eg. like the kitimat Rio Tinto project), where there is no accomodations to be had except for the remote company camp, that is not usually considered taxable, but if they rented a house for you in Terrace, BC for 3 years, the CRA may think that you could have just moved there permanently for 3 years and then back to QC.
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Did you find out more?
I think that the tempoary nature of it is to highlight the impracticality of a person moving to the job site to complete the role. If you worked across several jobsites over the year (even if the primary project goes on for several years, you aren't full time there), or if you are only there for a few months, it would not be taxable -- like hotel costs.
If it were feasible that a person would move to the job site location (or nearby) for their primary residence, then having a second place to live would be a taxable benefit... Think of it this way -- what if you are living near the project site for 21 days a month, and only have a vacation cabin as your other property -- would not the CRA think of your job site location as the defacto primary location, and $$ paid to give you a residence are taxable?
If you are working at a remote camp (eg. like the kitimat Rio Tinto project), where there is no accomodations to be had except for the remote company camp, that is not usually considered taxable, but if they rented a house for you in Terrace, BC for 3 years, the CRA may think that you could have just moved there permanently for 3 years and then back to QC.
Sorry for the late answer!
No I didn't find out more. I am planning to eventually ask my company about the CRA requirements to make sure they have the same undestanding, but didn't do it yet.
I agree with you with you on this statement : If you are working at a remote camp (eg. like the kitimat Rio Tinto project), where there is no accomodations to be had except for the remote company camp, that is not usually considered taxable, but if they rented a house for you in Terrace, BC for 3 years, the CRA may think that you could have just moved there permanently for 3 years and then back to QC.
And that's pretty much my case. There's a remote camp that I could live in, but also a nearby city I can rent an place in. My company basically gives me the choice (they pay the same amount for both). I could propably move there for the length of the project (+/- 4 years), but I'm not really interested in doing so. I like the 10 days off I have at home.
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You may also want to read about the Canadian Senators that were reprimanded for claiming second home expenses as tax deductions. Perhaps something in that case study will be illuminating.