Income Tax APPLICATION OF THE ACT

Transcription

1 INTERPRETATION AND ADMINISTRATIVE BULLETIN CONCERNING THE LAWS AND REGULATIONS Income Tax IMP Deduction f individuals residing in remote areas Travel expenses and board and lodging expenses Date of publication: June 29, 2006 Reference(s): Taxation Act (R.S.Q., c. I-3), ss Regulation respecting the Taxation Act (R.R.Q., 1981, c. I-3, r.1, as amended), ss R R4 This bulletin sets out the position of the Ministère du Revenu du Québec concerning the amount attributable to travel expenses and to board and lodging expenses that gives entitlement to the deduction f individuals residing in remote areas. APPLICATION OF THE ACT TRAVEL EXPENSES 1. Where an individual a member of his her household makes me than two trips f non-medical purposes in a year, the individual may choose the two trips regarding which he she intends to claim a deduction in the computation of income. 2. The term travelling expenses used in section 350.2R4 of the Regulation respecting the Taxation Act includes air, train bus fare, expenses related to the use of an automobile, meals, accommodation, and related expenses, such as taxi expenses and highway ferry tolls. 3. To give entitlement to a travel deduction, the trip must have started ended in the particular year, and the individual must have received an amount enjoyed a benefit because of his her office employment f that year. 4. If a member of the individual s household makes a trip at the end of a particular year and the individual does not obtain a reimbursement f the travel expenses from his her employer until the following year, the individual may not claim a travel deduction (a) f the particular year, because the individual did not receive a taxable benefit respecting the trip f that year; (b) f the following year, because the individual did not incur any expenses respecting the trip f that year.

2 5. The Ministère considers that, where the benefit is granted in the fm of non-refundable tickets travel vouchers, the benefit is received in the year the trip begins. BOARD AND LODGING EXPENSES 6. The term self-contained domestic establishment used in section of the Taxation Act (TA) means a dwelling-house, apartment similar place of residence in which an individual as a general rule sleeps and eats. This term does not include a bunkhouse, a dmity a room in a boarding house hotel. Without limiting the generality of the fegoing, a residence that contains a kitchen, a bathroom, sleeping facilities and a private entrance is considered a self-contained domestic establishment, provided that it is complete in itself and is separate from any other dwelling in the same building. A mobile home may be considered a self-contained domestic establishment if it meets these conditions. The size of the residence is irrelevant. 7. Where an employer provides a residence free of charge to an employee and pays all expenses f public utilities and other costs related to the residence, the Ministère considers that the employee maintains and resides in a self-contained domestic establishment. 8. Below is an example of how section of the TA applies to a couple that maintains and resides in a self-contained domestic establishment in a prescribed nthern zone throughout a particular taxation year. Bob s income f the particular year is $50,000 and Anna s is $20,000. An amount of $7.50 f each day in the year may be included in the computation of the amount that is attributable to Bob and Anna s board and lodging expenses. However, in such a case, neither Bob n Anna may include an additional amount of $7.50 per day in the computation of the amount attributable to board and lodging expenses. However, if either Bob Anna does not include in the computation of the amount attributable to board and lodging expenses the amount of $7.50 f a particular day, the other spouse may include in the computation of his her amount attributable to board and lodging expenses a total amount of $15 f that particular day.

3 Determination of the amount attributable to board and lodging expenses f a year that is not a leap year A. Each of the spouses includes an amount of $7.50 f each day in the year. B. Anna does not include an amount in the computation of her amount attributable to board and lodging expenses. C. Anna includes an amount of $7.50 f the first 181 days in the year only. 20% of $50,000 = $10,000 20% of $20,000 = $4, $7.50 = $2, $7.50 = $2, % of $50,000 = $10, $15 = $5,475 20% of $50,000 = $10,000 20% of $20,000 = $4,000 (181 $7.50) + (184 $15) = $4, $7.50 = $1, Since the area was a prescribed nthern zone f the particular taxation year, the deductible amount of board and lodging expenses in each of the situations described above is equal to 100% of the amount attributable to the board and lodging expenses, as follows: DEDUCTIBLE AMOUNT Situation A $2, $2, Situation B $5, Situation C $4, $1, Below is an example of how section of the TA applies to a couple that maintains and resides in a self-contained domestic establishment in a prescribed intermediate zone throughout a particular taxation year. In such a case, the deductible amount of board and lodging expenses in each of the situations described in point 8 is equal to 50% of the amount attributable to the board and lodging expenses, as follows:

4 DEDUCTIBLE AMOUNT Situation A $1, $1, Situation B $2, Situation C $2, $ Below is an example of how section of the TA applies to an individual who resides in a prescribed nthern zone and a prescribed intermediate zone successively in the same particular taxation year. The deductible amount of board and lodging expenses is determined by computing the amounts f each zone separately. From January 1 to June 30, 2005, Nicholas maintained and resided in a self-contained domestic establishment located in a prescribed nthern zone f the year and, from July 1 to December 31, 2005, in a self-contained domestic establishment located in a prescribed intermediate zone f the year. No other person residing in the same self-contained domestic establishments as Nicholas claimed a deduction f board and lodging expenses. Nicholas s income f 2005 is $25,000. The amount Nicholas may deduct in computing his income f the year with regard to board and lodging expenses is determined as follows: 20% of income: 20% of $25,000 = $5, % (181 $15) = $2,715 plus 50% (184 $15) = $1,380 Total = $4, The term principal place of residence of an individual used in section of the TA means the place where the individual lives on a regular and usual basis. 12. In certain circumstances, section of the TA limits the amount that an individual residing in a particular area may deduct in computing his her income f a particular taxation year f board and lodging expenses. This limit applies, f a particular area, where the individual is not required to include in the computation of income f the particular year, under subparagraph i of paragraph a of section 42 of the TA, an amount that the individual received enjoyed because of, in the course of, his her office employment because the individual carries out duties of a tempary nature at a special wk site sufficiently remote from his her principal place of residence that the individual cannot reasonably be expected to return there daily because of the distance between the particular wk site and the individual s principal place of residence (see the current version of bulletin IMP. 42-1), and that

5 (a) represents the value of the individual s board and lodging expenses in the particular area, an allowance not exceeding a reasonable amount f the expenses; and (b) may reasonably be considered to be attributable to the ption of the period of residence in the particular area, contemplated in section of the TA, included in the particular year and during which the individual maintained a self-contained domestic establishment as a principal place of residence in an area other than a prescribed nthern zone a prescribed intermediate zone f the particular year.