Details are as follows on the amounts paid for transportation and for room and board on special work sites.
REVENU QUÉBEC—PROVINCIAL TAX
The amounts set forth in the collective agreement shall not be included in the employee’s income. Therefore, they’re not taxable.
Room and board and transportation as a general rule
- If an amount has been received in pursuant to a collective agreement, the amounts received are neither deductible nor taxable for the employee.
- An amount paid for travel or for travel time is not taxable allowance unless the employee is using the employer’s vehicle or it is not specified in the collective agreement that it is travel expense.
CANADA REVENUE AGENCY—FEDERAL TAX
Room and Board
Any money received for the room and board or for transportation costs is a taxable benefit unless it complies with the “Special Work Site” for the purpose of the Income Tax Act.
The following requirement that need to be met to ensure that the allowance received is not taxable:
- The employee’s duties required them to be away from their principal place
- The employee had to work at a special work site where the duties performed were of a temporary nature.
- The employee kept, at another location, a self-contained domestic establishment as their principal place of residence (not rented by another person). And to which, because of the distance, the employee could not reasonably be expected to return daily from the special work site.
- The boarding and lodging provided is for a period of at least 36 hours.
More precisely, in order for the allowance for boarding and lodging not to be added on the employee’s income, therefore nontaxable, certain criteria must be met:
- The employee’s duties required them to be away from their principal place. While the
Income Tax Act does not define the term, it is in reference to the estimated time, the type of
the work, etc.
- The employee has another place of residence that remains at his disposal the whole time he is
on the temporary work site. Therefore, he may not rent it to another person.
- The employee could not reasonably be expected to return daily from the special work site.
120 km in the collective agreement is generally considered reasonable.
- Work forcing the employee to be absent from his main place of residence for at least 36 hours,
Moreover, always keep in mind that you must prove your claim before an agent of the Canada Revenue Agency, otherwise no matter what the criteria is, he or she will consider it as a taxable gain.
The allowance for travel (time and travel expense) will be added to the employee’s income, which is therefore taxable, unless it is intended for:
- A period of at least 36 hrs away from his principal residence for which the employee benefited from a room and board
- The allowance covers the travel between his place of residence and the special work
Also, any other amount paid for travel, will be taxable to the Federal Government.
It is in the best interest of the employee to keep a personal record of his travel with allowance. In addition, the TD4 form should be completed by the employer.
For information purposes only: this information is not to be taken as tax advice. It is important to consult your tax practitioner as each case is different.