Working In Another Province

by Tax Guy - Burlington Accountant on December 29, 2008 Print This Post Print This Post

Question: “My husband accepted a job that has him living and working in Alberta while our family home is in British Columbia.  He rents a hotel by the week while he is working and receives a living allowance from his employer to cover his expenses while he is away.  However, the allowance does not quite cover the costs.  Will he be able to claim any moving expenses?  Will he be able to claim any work expenses over his living allowance?  Will he be able to choose his province for taxation?”

These are excellent questions.  I’ll address each of the issues in sequence.

Residency

Normally your province of residence for income tax purpose is where you were living on December 31st of the tax year.  However, in this case the determining fact will be the location where he ordinarily resides.  The determining factor here would be where you reside, the family home is, bank accounts etc.  It would appear the province of residence would be British Columbia.

Moving Expenses

Moving expenses are deductible if there is an official move of ore than 40 KM closer to the place of employment.  This would involve moving the family home to Alberta near where your husband works.

The Allowance

The receipt of the allowance itself must be included in income as employment income.  If certain conditions outlined in the next section are met, then deductions may be claimed for the travel expenses.  However, the allowance would not be taxable if it were reasonable and was to cover costs to work away from the location where the employer is normally located.

Travel & Motor Vehicle Expenses

Travel and motor vehicle expenses may be deducted under subsections 8(1)(h) and 8(1)(h.1) of the Income Tax Act respectively.  To make a claim under these provisions of the act your husband must meet the following conditions:

1.         He must be required to pay his own travel expenses, accommodation expenses, and motor vehicle expenses as well as have a T2200 signed by his employer.

2.         He must be ordinarily be required to carry out his duties away from the employer’s place of business.

3.         He must not be in receipt of an allowance.

If the first two conditions are met, we could assume that the allowance is not taxable.  In this case he may claim that the allowance was unreasonable, add the value of the living allowance to his income, and claim deductions for travel and motor vehicle expenses.

The above assumes that your husbands’ employer is local but he is required to work away from their normal business location.  If the circumstances are different then the tax result could be different as well.  I would strongly suggest that your husband meet with an accountant in your area to discuss your circumstances.

About The Tax Guy...

Dean Paley CGA CFP is a Burlington accountant and financial planner who services individuals and business owners locally, nationally and internationally. Dean has appeared in the National Post, Toronto Star and Metro News.

To find out more, visit Dean's website Dean Paley CGA CFP or connect via Twitter @DeanPaleyCGACFP.

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{ 104 comments }

Dailin Li March 26, 2009 at 4:11 pm

My husband is a salaried employee in a company in another province PEI. He works at home in Vancouver. However in 2008 he was required to work in his company in PEI for one month. His employer paid flight tickit and hotel. My husband covered the expenses of his meal. Can he claim meal expenses for that one month? How? He didn’t keep any receipts for meals.

Thank you very much.

Tax Guy March 26, 2009 at 8:54 pm

@ Dailin,
I can’t say for sure. If he was a salesperson possibly if certain conditions were met. If he was not a salesperson potentially if he was required to pay these expenses and the employer completes and signs form T2200, he must be ordinarily required to work away from his normal place of business, and not have received an allowance or reimbursement for these expenses.

Nomi John January 30, 2010 at 8:09 pm

I am working in Quebec but my spouse and kids are living in Ontario, all my bank accounts is in Ontario. Where I have to submit my Income tax return. I always applied as family. Thanks.

Tax Guy January 30, 2010 at 8:49 pm

@Nomi John
As long as you and you spouse are not separated, then you’d be a resident of Ontario and would file taxes there.

D. Smith January 31, 2010 at 1:05 am

I have stuttering a speech disability and I am going to submit my income tax return and first time going to submit the disability form duly attested from my doctor. I came to know recently that I can get tax credits for this disability. Any suggestions how to file the tax return and how to maximize my benefits. I have less than $11,000 earning last year. I am living in Ontario.

Tax Guy January 31, 2010 at 8:18 pm

@D. Smith – Once you have your Disability Tax, it’s a matter of claiming the credit on your tax return, Schedule 1, line 316. Give your income level, it is unlikely you will pay tax this year.

Tony February 14, 2010 at 10:05 pm

I moved to Nova Scotia from Toronto in May 2009 for work. I am renting a place here, but my bank accounts, cottage, and family are all in Ontario. Can I file my taxes there? If I don’t I will end up owing taxes due to the different tax rates per province. Is there any way around this?

Thanks

Tax Guy February 15, 2010 at 7:53 pm

@Tony – If you are living and working in Nova Scotia, you are probably a resident of Nova Scotia unless you own a home you ordinarily occupy in Ontario.

Elizabeth March 16, 2010 at 2:56 pm

I am doing a friends income tax for 2009. He is self-employed and works Jan. Feb. March December in Ontario. The rest of the months h e works in Alberta. How do I claim his meals out in Alberta? I have been told he can claim 100% of the total. Do I need to break it down and do 2 business pieces

Tax Guy March 16, 2010 at 3:19 pm

Hi Elizabeth,

Canada and it’s provinces tax their residents on their worldwide income. While it is possible to be a resident of more than one province during the tax year, generally the province he was resident in on December 31, 2009 is his province of residence for tax purposes (see IT-221R3 to help determine the place of residence – it is written for those who are determining if they are a resident of Canada but the same logic applies to being a resident of a province).

Section 2607 of the Income Tax Regulations (“Regulation 2607″) provides that an individual who is resident in more than one province on the last day of the taxation year is deemed to have resided on that day only in that province “which may reasonably be regarded as his principal place of residence”. The term “principal place of residence” is not defined in the Income Tax Act (the “Act”) or Regulations, however, our interpretative position (as set out in IT-221R3) is that determining “principal place of residence” is a matter of evaluating the strength and number of the residential ties to each province. The “principal place of residence” will be the province where the individual has the most significant residential ties. On the facts set out above, the taxpayer’s “principal place of residence” is probably Alberta for purposes of the deeming rule in Regulation 2607.

In short, he is either a resident of Ontario or a resident of Alberta and he must file provincial returns for one or the other and not both and split them. See IT-221R3 to determine province of residence.

Rusty April 4, 2010 at 3:16 pm

I’m currently working for a company out of Alberta. We have a schedule of 20 days on and 10 days off. On my days off I fly back home to my primary place of residence located in Ontario. I pay for this flight out of pocket and receive no travel pay from my company. Can I claim all my flight expenses on my tax return?

Tax Guy April 5, 2010 at 11:22 am

@Rusty:
No. It is the employee’s responsibility to get to and from work … regardless of location. You could claim moving expenses if you moved closer to that job.

Bryan April 16, 2010 at 9:32 pm

I am currently working on a construction site in saskatchewan and I am a resident of ontario.I recieve no travel allowance from either place of resdents,primary or secondary.I do recieve a live out allowance to cover rooms and meals,but can I get a tax break on initial travel or trips home to see wife and kids every so often.Being in the form of wear and tear on the car,and fuel expences.I also belong to a union based in ontario which got me the job out of province.

Tax Guy April 17, 2010 at 11:07 am

You can deduct the union dues but not the travel unless it is in a remote part of the country and there are limits. If you moved to SK, the moving costs would be deductible.

Anthony C May 7, 2010 at 5:29 pm

I moved from BC to Quebec about 5 years ago an am filing Quebec Tax, I would like to return to BC rent an apartment and commute to Quebec but I own a house in Quebec and my children are schooling in Quebec since I am able to commute back to BC every weekend can I file taxes in BC and since my wife has no income can she file Quebec tax or does she have to file BC taxes. Does my children schooling in Quebec force me to pay taxes there.?

Tax Guy May 7, 2010 at 6:58 pm

Hello Anthony,

Regardless of where you rent, you are a resident of Quebec and must file and pay taxes there. This is because you own a home in Quebec and your wife and dependent children live there.

Anthony C May 7, 2010 at 7:08 pm

I took the opportunity to speak to revenue canada , at first they said to be a resident of a province you have to have a medical card, bank statment and driving licence from that province, I told them thats not a problem, I also told them does having a house in quebec make me unable to be resident of BC they said not at all finally they were stumped and said I dont think it will be a problem as long as on 31 dec you are in BC ?. My children are 21 and 20 and my wife follows me back and forth to BC (work for airline)…

Tax Guy May 7, 2010 at 7:20 pm

Hi Anthony,

The following link to the interpretation bulletin deals with being a resident of Canada but the exact same rules are applied by the CRA and the courts to determine province of residency. Look at paragraphs 4 through 10. http://www.cra-arc.gc.ca/E/pub/tp/it221r3-consolid/it221r3-consolid-e.html

I would not rely on the comments of a call taker at the CRA. I would obtain independent and paid advice to avoid any headaches or obtain an Advance tax Ruling directly from the CRA.

Shah May 23, 2010 at 2:15 pm

I have been offered a job in Saskatoon that will be for 2 years, I will be provided LOA.

I want to keep renting my current residence here in Alberta but at the same time my family may move along with me to Saskatoon and I have to rent another accomodation over there as well. My Alberta accomodation will be only for me and my family when we visit once a month or so.

Is it officially allowed or I am planning to do something against Canada Revenue Rules and Regualtions. Thanks. Looking forward to reply.

Tax Guy May 23, 2010 at 7:36 pm

Shah,
You can certainly keep your Alberta residence but you will be a resident in Saskatchewan and will pay tax in that province.

Shah May 24, 2010 at 12:59 am

If I am become a resident of Saskatehewan …will I still be elligible for LOA because LOA is live out Assistance. Please clarify. Thanks.

Regards

Tax Guy May 25, 2010 at 1:03 pm

Hello Shah,
I’m sorry but I’m not sure what LOA means.

Anthony C June 7, 2010 at 5:46 pm

My wife has been offered a job in BC but we live in Quebec (unable to get a job in Quebec due to language problems), if she works in BC, can she claim tax deductions for rent and travelling expenses to BC. I work in Quebec.

Tax Guy June 8, 2010 at 12:06 pm

Hello Anthony,
One cannot deduct the cost of travel to and from work regardless of the distance. If the employment is permanent, and you choose to move to BC, then you will be able to claim moving expenses.

Curt June 17, 2010 at 2:54 pm

I work in Alberta 3 wks/mth, my family and owned home are in Manitoba. The first 6mths of the year I was provided an out of town expense by my employer, which is included in my income(T4)but was not taxed. The amount covered about 20% of my living costs in Alberta for the year(rent-meals etc). Here’s where I get a little confused-I’m a truck driver, my day begins and ends at my employers physical location but the work is not local-more than 50kms away-often there are hundreds of miles driven in a day.
Does this allow me to claim a portion of my meal and lodging expenses(have reciepts)? And if so would it be along the lines of the long haul trucker or crew deductions?

Does the untaxed living allowance that was included on my T4 income for the 1st 6mths of the year make a difference anywhere??
Any help you could provide would be great

Tax Guy June 23, 2010 at 3:44 pm

Hello Curt,

Based on my read of your situation, you are a resident of Manitoba for tax purposes. Manitoba is where your principal residence and that is where you pay tax.

You are an employee and not in the “business” of being a long haul truck driver. Therefore, your range of deductions is limited.

The CRA’s document Employment at special or remote locations provides some clarity: http://www.cra-arc.gc.ca/E/pub/tp/it91r4/it91r4-e.html

Generally, the amount paid to you would be taxable regardless of whether your employer deducted tax or not. You may be able to claim the allowance as income and then claim the meals and lodging as a deduction for travel expenses but you will need your employer to complete form T2200.

Beth July 2, 2010 at 11:01 pm

I teach in Labrador. However this summer, I took a job in Alberta and I will work there throughout the summer break. I will return to Labrador to teach during the latter part of August. I still get payed teachers’ salary over the course of the summer, although currently working Alberta.

Can I claim my plane ticket to and from Alberta to work?

My husband also travels to Alberta for work (although he does not teach). Can he clam his travel expense to work as well?

Thanks, Elizabeth

Tax Guy July 3, 2010 at 9:16 am

You cannot claim travel to and from work unless you are required to work away from your company’s normal place of operations.

Rick July 14, 2010 at 9:29 pm

I am working in British Columbia but live in Alberta. Do I pay BC taxes or Alberta Taxes. Right now BC taxes are being deducted from my pay and was told that I work in BC and have to pay BC taxes.

Tax Guy July 15, 2010 at 1:00 pm

Hello Rick,

If you live in Alberta, then you pay tax in Alberta regarless of where you work. When you file your taxes, you will disclose your province of residence. If you have an accountant, you might want to hgave him or her write a letter you your employer explaining the rules and requesting that Alberta tax be deducted. You can also ask the CRA for a letter or ruling to provide to your employer.

While I’m not sure what the dollar difference will be, but if the BC tax is higher, you’ll get a refund when you file.

Carrie September 2, 2010 at 5:35 pm

Actually TAX GUY, The CRA website has a publication that says if you work for a BC company in BC you will pay BC taxes. If you work for a BC company in Alberta you pay Alberta taxes. Just look under the forms and publications for income tax.

Carrie September 2, 2010 at 5:38 pm

T4032OC Payroll Deductions Tables – Income tax deductions – In Canada Beyond the Limits of Any Province or Outside Canada – Effective January 1, 2010

“If the employee reports for work at your place of
business, the province or territory of employment is
considered to be the province or territory where your
business is located. To withhold payroll deductions,
use the tax table for that province or territory of
employment.
If you do not require the employee to report for work
at your place of business, the province or territory of
employment is the province or territory in which your
business is located, and from which you pay your
employee’s salary.”

Tax Guy September 3, 2010 at 8:44 am

And the case law says if you work in Alberta and live in BC, you pay BC tax.

Ibraheem July 22, 2010 at 7:55 pm

I will be working in Quebec. However, my family lives in Ontario. I will visit them during the weekend and whenever it is possible. I applied for a health card from Quebec and would like to apply to exchange my driver license in Ontario. My bank account is in Ontario. Should I claim my tax in Quebec or Ontario?

Tax Guy July 23, 2010 at 9:26 am

Do you have a spouse and/or dependents in Ontario? If so you pay tax in Ontario.

Your residence is based on where you reside.

Thomas August 11, 2010 at 6:04 pm

I will be taking a full time job in and mving to Alberta in SEPT 09 and will probably just rent an apartment due to the outrageous prices in Fort McMurray; moving a small amount of furnirure from Ontario. I expect to remain in AB for 6-7 years before returning to ON to retire.

My wife and I own a home in Ontario which we will sell within 6-9 months (Approx April 2010) but will downsize to a condo in Ontario (Joint Ownership) c/w most of our furniture etc. where my wife will reside fulltime with our 18 year old son who starts university locally. We will maintain a joint bank account in ON.

My wife has no intention of moving to AB but I will reside there fulltime working for an AB Corpn. complete with AB driver’ licence, bank accounts, etc. I expect to visit ON about of 14-21 days per year .

Regarding residential ties, with this working/residing permanently in AB and retaining joint ownership of a home in Ontario where my wife will be located fulltime….Do I file ON or AB taxes for 2010 and beyond?…thank you

Tax Guy August 11, 2010 at 8:45 pm

You would normally be considered a resident of Ontario based on the fact your spouse and child reside there. However, you may be dual resident give your significant residential ties and as such may be considered a resident of Alberta.

I am reluctant to confirm or comment on your status further due to liability concerns and the lack of a clear indication of your province of residency. I would ask that you contact the CRA directly with the above facts and request an Income Tax Ruling on your provincial residency status.

Chris August 24, 2010 at 11:28 am

I currently live in SK, Will be working for a BC owned company and working in AB. Is there any legal way to have AB taxes deducted? If I get a residence in AB? Do I have to have an AB license? Can I have an interprovincial license?

Thanks.

Tax Guy August 25, 2010 at 7:51 am

Hello Chris,

If you live in Saskatchewan, then you pay Saskatchewan’s income tax. If you want to pay Alberta income tax, you will need to move and live in Alberta.

I have no idea what an inter-provincial license is.

mhel August 28, 2010 at 9:43 pm

My family and I are permanent residence through SINP but I have a job offer to work and live in Alberta. If I have to accept the job, what would be the consequences in our permanent residence. Should I have to file my income tax to both provinces?

Tax Guy August 29, 2010 at 9:34 pm

Hello Mhel,
This is a legal an immigration question as opposed to an income tax question and I am not in a position to comment or provide any insight on immigration issues.

You might want to try the web boards at http://www.canadavisa.com/canada-immigration-discussion-board/index.php

For tax purposes, you will be a resident of the province you live in If you are in Alberta on December 31, you file Alberta tax.

Murraka September 25, 2010 at 12:49 am

I reside in Ontario but have been asked to relocate temporarily for a period of 18 months to my company’s Halifax office. I’m single and leaving no immediate family behind (ie: have no spouse or children but my parents and siblings are all still located in Ontario). I have a condo that I own in Toronto and will maintain all of my bank accounts and personal effects in Toronto while I’m away. However, I may rent my condo while I’m away. Will renting versus leaving my condo empty impact my residency status? While living in Halifax, which province should I file under as my province of residence?

Tax Guy September 26, 2010 at 9:02 am

Of you rent it, you may be a resident of Nova Scotia.

Murraka December 5, 2010 at 6:53 pm

If I don’t rent out my condo in Ontario (I haven’t done so yet), can I file as an Ontario resident in that case?

Tax Guy December 6, 2010 at 9:26 am

As long as the prioperty is available for your occupation you should be able to remain an Ontario resident. However, the CRA may look at other factors to determine residency and it is possible for you to be considered resident in Nova Scotia.

Kim October 5, 2010 at 3:45 pm

My husband and I own a home in Nova Scotia; last month he moved to Nunavut on a 2 year work contract. I will be moving there with him [to work] in a few weeks once I tie up loose ends here. We will be keeping our home, although likely renting it out while we’re gone. Similar to Murraka’s situation, I assume we would then file taxes in Nunavut.
My main question is based around unemployment insurance – earlier this year I was let go from my permanent position and spent a significant amount of time collecting EI in Nova Scotia. Will filing in a different province pose any issues in my situation, ie, will I have to pay back the EI money I had received?

Thanks

Tax Guy October 6, 2010 at 2:50 pm

It shouldn’t (I am no expert on EI benefits), but an anonymous call to them should confirm one way or another.

Susan October 19, 2010 at 10:38 am

My partner lives in Ontario but worked (self employed) in Alberta for 6 months. How does he claim that on his Ontario income tax?

Also, my house is in my spouses name. Can I still claim mortage interest and protperty taxes on my income tax because I work out of the home.

Tax Guy October 19, 2010 at 10:51 am

Your spouse’s province of residence was Ontario (that’s here is home and spouse resided). He files an Ontario tax return for the year.

I assume you are self-employed and claiming home office expenses. If you paid these expenses then you can claim them as an expense.

susan October 19, 2010 at 11:39 am

Yes I am self employed but I do not own the house. My spouse does. Can I still claim mortgage and property tax?

Tax Guy October 19, 2010 at 12:36 pm

Technically, you can deduct them only if you pay them.

Zack October 27, 2010 at 8:05 pm

I am currently a resident of Saskatchewan taking university classes. Next year I want to rent a place in Winnipeg for 6-9 months so I can live with my girlfriend while she finishes her degree (she is a sask resident). After that I want to move to BC to take more classes. Is it possible to keep Saskatchewan as my place of residence(for tax purposes) and work in Winnipeg?

Tax Guy October 28, 2010 at 9:31 am

Your province of residence is where you live. If your home is in MB then you are resident in MB.

Kathleen October 29, 2010 at 6:09 pm

Hello

I am currently working at home as an employee not contractor, for a company in Ottawa, Ontario. There is a chance my husband may be getting a job in Vancouver. Which may cause us to move and I would like to keep my job. How does it work tax wise if I’m working for a company in a different province?

Thank you so much,

Kathleen

Tax Guy October 29, 2010 at 7:24 pm

Hi there,
If you move to BC with your husband, you will file a BC tax return and pay BC tax.

Aaron November 6, 2010 at 3:52 pm

Hi, I have recently started a business in Alberta. It is registered, has a business number, and I have just started hiring employees.

The problem I have is that the contract I got is in Saskatchewan. Most of my employees are from BC, and some Ive hired locally.

When choosing the TD1 form to have them fill out would I choose an Alberta or Saskatchewan TD1? Can it be different for each employee or would I just deduct Alberta tax?

thanks

Tax Guy November 8, 2010 at 9:30 am

The employees pay tax in the jurisdiction in which they work from.

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