2021-0822931M4 Commuting allowance - 6(1)(b)(ii)

Principal Issues: Taxable benefit - employer-paid commuting allowance received by civilian employee of Canadian Forces.

Position: Paragraph 6(1)(b), and 6(1)(b)(ii).

Reasons: See below.

Author: Zabolotney, Brad
Section: 6(1)(b); 6(1)(b)(ii)

XXXXXXXXXX

Dear XXXXXXXXXX:

The Honourable Diane Lebouthillier, Minister of National Revenue, received your correspondence of May 4, 2021, about the commuting allowance you receive as a civilian working for the Canadian Forces. She has asked me to reply on her behalf.

You ask why civilians have to include the commuting allowance in their income while members of the Canadian Forces do not have to.

I understand that the commuting allowance is given for travel between your home and your place of employment or a member of the Canadian Forces’ home and their place of employment. It is the long-standing position of the Canada Revenue Agency (CRA) that travel between an employee’s home and a regular place of employment is generally personal travel.

Under paragraph 6(1)(b) of the Income Tax Act, the amount of an employer-provided allowance for personal travel has to be included in an employee’s employment income. However, subparagraph 6(1)(b)(ii) of the Act excludes certain travel allowances received by members of the Canadian Forces from their employment income. Based on your description, it appears that the commuting allowance received by members of the Canadian Forces would be excluded from their employment income under that subparagraph. Please note that this exclusion applies only to members of the Canadian Forces.

The CRA is responsible for administering and enforcing the Act and its regulations, while the Department of Finance Canada is responsible for developing federal tax policy. I understand that you have already written to the Honourable Chrystia Freeland, Minister of Finance, about the taxation of your commuting allowance; I have confidence that her office will give all due consideration to your correspondence.

I trust the information I have provided is helpful.

Sincerely,

Geoff Trueman
Assistant Commissioner
Legislative Policy and Regulatory Affairs Branch
Canada Revenue Agency

Brad Zabolotney
2021-089293

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