Truck allowances taxable as they involved both flat-rate and per-kilometre rate

Tax - Income Tax - Employment Income

Minister determined that various allowances provided by employer to employees working in remote locations were insurable and pensionable earnings. Minister assessed employer for Employment Insurance premiums and Canada Pension Plan contributions not deducted and remitted with respect to those amounts. Employer appealed. Appeal allowed in part. If allowances paid were taxable under Income Tax Act, then employer was liable for unremitted amounts. Despite difficulties with employer’s documentation, Minister’s decision to disallow all of amounts in question was not factually supportable. Employer and employees failed to complete and submit form required to exclude amounts for employment at special work site or remote location under s. 6(6) of Act and, in any event, evidence did not establish that comprehensive requirements of provision were met. Subsistence allowance was travel allowances paid to employees for working on road and in remote locations to cover meals and sometimes hotels. Employees were required to work out of town and, where evidence was available to establish daily amounts, they were reasonable as they did not exceed travel allowance paid to government employees but total amount for one employee was unreasonable in absence of such evidence. Truck allowances were taxable as motor vehicle allowances that were unreasonable because they involved both flat-rate and per-kilometre rate. Trailer allowances were reasonable travel allowances. Amounts paid to employee H were not supported by any evidence so Minister’s assumptions would stand and amounts were taxable. Assessments for 2013 and 2014 would be referred back for reconsideration. Amounts of $10,000 and $2,700 received by employee A, of $7,300 received by employee B, of $10,950 and $7,000 received by employee I, of $300 received by employee F and $360 received by employee P were travel allowances excluded from income under s. 6(1)(b)(vii) of Act.

Al Saunders Contracting & Consulting Inc. v. M.N.R. (2019), 2019 CarswellNat 1481, 2019 CarswellNat 1697, 2019 TCC 86, 2019 CCI 86, Susan Wong J. (T.C.C. [Employment Insurance]).

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