Remote Work Site

From: Canada Revenue Agency

Please note that the following Policy Statement, although correct at the time of issue, may not have been updated to reflect any subsequent legislative changes.

GST/HST Policy Statement P-090

Date of Issue

May 25, 1993

Subject

Remote work site.

Legislative Reference(s)

Subsection 191(7) of the Excise Tax Act.

National Coding System File Number(s)

11950-1

Effective Date

January 1, 1991

Text

This policy statement will discuss the meaning of the term "remoteness from any established community" and "self-contained domestic establishment" for the purpose of the election in subsection 191(7) of the Excise Tax Act (the "Act").

The meaning of "remoteness from any established community" and "self-contained domestic establishment" in subsection 191(7) of the Act should be interpreted in the same manner as such phrases are interpreted for the purpose of subparagraph 6(6)(a)(ii) of the Income Tax Act .

The election is available only where, at the time of the election, an employee of the registrant, who is required to be at the work location to carry out the duties of the employee's office or employment, cannot reasonably be expected to establish and maintain a self-contained domestic establishment at the work location because of its remoteness from any established community. The election may still be available if the self-contained domestic establishment could not be established and maintained by the employee for other reasons (such as financial difficulties), provided one of the reasons that the self-contained domestic establishment cannot be established and maintained at the work location (based, for example, on community services and (available) housing) is that the work location is remote from an established community.

When determining whether a work location is in fact remote from an established community, factors such as the following should be considered:

  • the availability of transportation;
  • the distance from an established community; and
  • the time required to travel that distance.

As a general rule, a work location will be considered to be "remote" if the nearest established community with a population of 1,000 or more is no closer than 80 kilometers by the most direct route normally traveled in the circumstances. Cases not meeting this general rule are not necessarily disqualified from the election under subsection 191(7) and will be considered on their merits.

The term "established community" is interpreted to mean a body of people who reside in the same locality and who are permanently settled in that location. Where an established community is in an area which is not "remote" (based on the general rule) from a work location, the location will still meet the requirements if community services and (available) housing are limited to the extent that workers could not reasonably be expected to establish and maintain at that community a self-contained domestic establishment. Where there is more than one established community located in an area which is not remote from a work location, the sum total of the services and housing available in all established communities should be considered.

The term "self-contained domestic establishment" is defined in Section 248 of the Income Tax Act to mean: "a dwelling house, apartment, or other similar place of residence in which place a person, as a general rule, sleeps and eats". The term will be interpreted to have the same meaning for the purpose of subsection 191(7) of the Act.

SAMPLE RULINGS

Example 1

Facts

1. A GST registrant engineering company begins work on the construction of a nuclear power plant in northern Saskatchewan.

2 The company has constructed a complex at the site to house the employees who will be working on the construction of the plant and subsequently for employees involved in the operation of the plant.

3. The community closest to the site, the village of Wikka, is 120 kilometers away and has a total population of 1,200 people.

Ruling Requested

Whether the site is remote from an established community for purposes of the election under subsection 191(7) of the Excise Tax Act ?

Ruling Provided

The site at which the engineering company is constructing the nuclear power plant would meet the requirement of "remoteness" as the site is situated more than 80 kilometers from the closest established community.

 

Example 2

Facts

1. A registrant constructs a hotel in the resort town of Banff, Alberta.

2. The registrant is required under a municipal by-law to construct an additional complex in which to house its employees.

3. Banff has a population of approximately 7,000 residents. Other nearby communities with populations of at least 1,000 are the town of Canmore and the City of Calgary. Canmore is located approximately 50 kilometers from Banff and Calgary is 130 kilometers from Banff.

4. Upon completion of the complex, employees of the registrant occupy the premises as their place of residence during the eight month period for which they are under contract with the employer.

Ruling Requested

Can an election under subsection 191(7) of the Excise Tax Act be filed in respect of the employee's premises ?

Ruling Provided

The employees could reasonably be expected to maintain their own self-contained domestic establishment in Banff (which itself constitutes an "established community") due to the size of its population and the facilities and community resources available. Accordingly, an election under subsection 191(7) can not be filed.

Example 3

Facts

1. A registrant constructs a hotel in the resort town of Wichita, Alberta.

2. The registrant is required under a by-law to construct an additional complex in which to house its employees.

3. Wichita has a population of 800 residents and the nearest "established community" is the town of Greenock which is 100 kilometers from Wichita and has a population of 1200 people.

4. Upon completion of the complex, in January 1992, it is supplied to employees of the registrant to occupy as their place of residence during the 18 month period of their contract. At such time, an election under subsection 191(7) of the Excise Tax Act was filed in respect of the complex.

5. In February 1993, gold is discovered in Greenock and the town grows to a population of 6,700 people within a two month period. Many, hotels, apartment buildings, businesses and community services spring forth in response to the surge in population.

Ruling Requested

If Wichita is no longer considered a remote work site in 1993, is the election made in 1992 still valid? In other words, is any GST triggered upon the change in status of Wichita?

Ruling Provided

Provided the election under subsection 191(7) has been properly filed in January 1992, the fact that the work location may no longer be considered remote from an established community at a time subsequent to filing the election would not invalidate or have an impact on the election. Although an improvement in services and an increase in available housing at the site or in the surrounding established communities could result in income tax consequences, the liability for GST for such property would not be triggered until such time as the property is supplied by way of sale or supplied by way of lease, license or similar arrangement primarily to persons who are not employees of the registrant or individuals who are related to the employees.

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