Subsection 110.7(1) - Residing in prescribed zone
See Also
B Morecroft v. MNR, 91 DTC 937 (TCC)
The taxpayer, who ate and slept at a trailer near his worksite in the Carmanah Valley on Vancouver Island was found to "reside" there "throughout" a period of more than six months notwithstanding the occasional visit to his wife and three children in Nanaimo, B.C. "To reside anywhere does not require the constant and uninterrupted presence by a person in a particular area" (p. 939).
Administrative Policy
22 August 2014 T.I. 2014-0528201E5 - Northern residents travel allowance
A travel allowance in a new employment contract will be calculated as a fixed and identified amount per hour worked (i.e., XX% of the total hourly compensation amount). The total hourly compensation (i.e., the sum of the wage amount and the travel allowance) will be the same as under the old contract. CRA stated:
[T]here must be a connection between the actual travel expenses incurred by a taxpayer or a member of the taxpayer's household and the amounts paid by the taxpayer's employer to defray those costs, in order for the amounts to be "...in respect of travel expenses incurred by the taxpayer..." under paragraph 110.7(1)(a)… . CRA accepts that an employer can pay a reasonable travel allowance before a trip, such as a reasonable "per hour" or "annual premium", provided the details of such an allowance are specified in the employment contract. …
[A] travel allowance provided for in a an arm's length new contract would not be considered a re-characterization of an existing salary…where:
- the old contract has legally ended;
- the legal rights and obligations under the new contract designate (on a prospective basis) a portion of an employee's hourly compensation as a travel allowance; …
- the travel allowance is accounted for separately in the payroll system and on the employee's pay stub; and
- the terms of the new contract are reflected in the collective agreement (where the employee is represented by a union).
23 December 2013 T.I. 2013-0505481E5 F - Application des paragraphes 6(6) et 110.7(1)
As per s. 110.7(4), the amount of the deduction at s. 110.7(1)(b) will be reduced by the amount excluded from income by virtue of s. 6(6)(a)(i).
2 April 1990 Memorandum (September 1990 Access Letter, ¶1406)
Discussion of the concept of residence for purposes of s. 110.7(1). The word "months" means "calendar months" by virtue of s. 35(1) of the Interpretation Act.
14 July 1989 Inter-Divisional Memorandum (Dec. 89 Access Letter, ¶1054)
Even though an individual may be physically absent from the prescribed area while on overseas assignment, he should still be considered as a resident of the prescribed area if that remains the centre of his vital interests, in which case if he claims the overseas employment tax credit, he may also be entitled to the northern resident deduction.