# employer refusing to ammend incorrect T4? Exemption for special work sites



## twowheeled (Jan 15, 2011)

I'm having some problems with my employer. I am working in Fort Mcmurray but living in Edmonton. I receive a travel allowance for $1200/month. At the beginning of my employment, which was Jan-11, I filled out a form TD4-Declaration of Exemption - employment at special work site. Having met all the conditions on this form, my travel benefits should be excluded from my taxable income. (If I am reading this correctly)

http://www.cra-arc.gc.ca/E/pbg/tf/td4/td4-11e.pdf

They continued to tax this benefit throughout the year, no big deal. But I just received my T4 and this amount is now included into my employment income. Instead of excluding it, they have put the amount into box 32-travel in a prescribed zone. 

Problem is I can't find any place to deduct this from my taxable income. I have asked them to amend the form and they refused to do it. "I have been doing this for 3 years I know what I'm doing." I called the CRA and they claim it should be excluded. What should I do?


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## MoneyGal (Apr 24, 2009)

Ideally, you would have dealt with this through the year, as you saw the deductions being taken. 

Your best option in this situation is to file the T4 as presented, and then file a T1adj (a form to adjust your tax return) after your return has been assessed. 

If you are entitled to the deduction, CRA will either automatically change your return as it is filed, or handle your adjustment request when the request is filed. 

CRA's word is authoritative (although I wouldn't necessarily say that someone answering the phone on their end provides an interpretation that will stand), so if you are entitled to the deduction, and they review your T4 and your return, you will indeed get it. They can override whatever your employer put on your T4.


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## ghostryder (Apr 5, 2009)

Maybe you don't qualify. You don't really provide enough info, but based on what you have said, I can see several possible reasons why you would not qualify for this exemption.

Starting with: The transportation allowance is only exempt "if the employee received board and lodging, or a reasonable allowance in respect of board and lodging, from his or her employer". 

You might want to read http://www.cra-arc.gc.ca/E/pub/tp/it91r4/it91r4-e.html


The special and remote worksite provisions are heavily used in western Canada especially in resource related businesses for obvious reasons. It's also heavily abused. If an employer is audited and found to be exempting payment that should not be, it's usually the employer that will get hit with the big CRA stick, not the employee. Sure the employee might have to pay tax on payment that was classed as exempt but was found not to qualify when audited, but employers are expected to know better. So CRA isn't as forgiving with them.


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## twowheeled (Jan 15, 2011)

I do meet all qualifications. I received board and lodging living in camp as provided by the employer. I have read through that bulletin already up and down and I know I am eligible for this.

MoneyGal- Will I have any luck with the T1adj if the employer still refuses to ammend the T4 (they are not sending an ammended T4 to the CRA either?) Are you saying that it doesn't matter what return I have calculated on my tax filing, and that the CRA will change it to the correct amount if the return should be higher? I have my doubts on this.


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## MoneyGal (Apr 24, 2009)

I am telling you that CRA's word is authoritative, as in they can and will override an employer-prepared T4. 

And if you disagree with CRA, you can appeal the decision. 

Here's more information on how CRA deals with individual taxpayers, including their pledge of taxpayer fairness: 

http://www.taxwiki.ca/TDP+Fairness+and+the+CRA


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## peterk (May 16, 2010)

Are you sure that the amount in box 32 in not equal to the amount you received in taxable housing benefit, and not travel?

I don't have my paperwork on me, but last year when I had a taxable housing benefit (fort mac) it was declared under box 32. My girlfriend is in fort mac right now, and on this year's t4 she has some 10k posted in box 32, this amount matched the amount of housing allowance she received.

While I can't seem to find anything published about Box 32 being used to report non travel related benefits, that certainly seems to be what my and her employers have been doing...


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## twowheeled (Jan 15, 2011)

peterk said:


> Are you sure that the amount in box 32 in not equal to the amount you received in taxable housing benefit, and not travel?
> 
> I don't have my paperwork on me, but last year when I had a taxable housing benefit (fort mac) it was declared under box 32. My girlfriend is in fort mac right now, and on this year's t4 she has some 10k posted in box 32, this amount matched the amount of housing allowance she received.
> 
> While I can't seem to find anything published about Box 32 being used to report non travel related benefits, that certainly seems to be what my and her employers have been doing...


Nope it is in the exact amount of the travel allowance. 

This is making my head spin and I need some help. I don't even want to deal with it at this point, what are my options? If I hire an accountant to do my taxes will they talk to my employer/CRA on my behalf? Or do I need a lawyer? The amount is not insubstantial, about $5000 of tax on top of $3000 I should be getting back this year.


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## MoneyGal (Apr 24, 2009)

Your best option, seriously, is to file with your existing T4 and then file a T1ADJ. There is no way for an accountant to "talk to CRA" except by filing a T1ADJ. 

If you hire an accountant or other tax preparer, they will file your return with the T4 as issued. There isn't any other way around this, and the kickoff for starting a review of your tax return is the T1ADJ. 

Besides, unless I misunderstand you, you've had the amounts deducted at source for the entire year. So you don't need to come up with tax payable - you will just have to wait for a refund. 

But seriously: the process of interacting with CRA is through the tax filing system - by filing a T1, and then filing a T1ADJ. You can't even write to a review board because there's nothing to review until the return is filed!


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## twowheeled (Jan 15, 2011)

MoneyGal said:


> Your best option, seriously, is to file with your existing T4 and then file a T1ADJ. There is no way for an accountant to "talk to CRA" except by filing a T1ADJ.
> 
> If you hire an accountant or other tax preparer, they will file your return with the T4 as issued. There isn't any other way around this, and the kickoff for starting a review of your tax return is the T1ADJ.
> 
> ...


Hi MoneyGal, to my understanding this would take a long time to get my money back, since I would have to wait until my accessment to come in then wait until they review the T1ADJ and finally issue me the difference. I am looking for the easy way of resolving this which I am hoping is my legal representation (be it accountant or lawyer) calling my employer and saying "as a tax accountant/lawyer I am telling you that you are wrong and you need to correct this or risk facing an audit when I file an employee complaint" Does this make any sense? 

Basically in my discussions with my employer they are trying to convince me there is a way to recover these taxed benefits in my return which I don't see as possible, since I am forced to delcare my employment income off of my T4 instead of through my own calculations/receipts. (aside from filing an adjustment as you described, which seems like a bandaid fix to me)


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## Charlie (May 20, 2011)

Since your employer has included the amount as "Travel in a prescribed zone" I'm guessing the allowance is not specifically for travel to/from your home in Edmonton, and not calculated as such. So your employer is right. It is a taxable amount. The second bit of paragraph 10 of the IT noted above is quite restrictive.

There's also a paragraph in this publication http://www.cra-arc.gc.ca/E/pub/tg/t4130/t4130-e.html#P1163_147587 under "Travel Assistance Benefits" that specifically notes the amounts are taxable and to be included.

You are, however eligible of the Northern Residents Deduction as Zone B. It's done through form T2222, and deducted on Line 255 in calculating your taxable income.

http://www.cra-arc.gc.ca/E/pbg/tf/t2222/README.html

You'll have to crunch through how it works. I've not done it as I'm a southern resident -- or at least as southern as we get up here in the Great White North.

If you've been a bit rude to the payroll guy, you may owe a beer or two .


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## twowheeled (Jan 15, 2011)

Charlie said:


> Since your employer has included the amount as "Travel in a prescribed zone" I'm guessing the allowance is not specifically for travel to/from your home in Edmonton, and not calculated as such. So your employer is right. It is a taxable amount. The second bit of paragraph 10 of the IT noted above is quite restrictive.
> 
> There's also a paragraph in this publication http://www.cra-arc.gc.ca/E/pub/tg/t4130/t4130-e.html#P1163_147587 under "Travel Assistance Benefits" that specifically notes the amounts are taxable and to be included.
> 
> ...


The travel allowance is specifically for that reason only. I am provided with transportation at work (company vehicle) and expected to use that to commute back and forth between work and camp. In fact it is the only way to get from a to b. 

I am not eligible for the northern resident deduction as I read it. For 8 months of the year I was living in camp (dormitory) and 4 months I was renting a room in a house. As I understand it neither are considered "dwellings". 

Also one paragraph up in the publication you linked shows the proper way to exempt this income from taxable benefits. 

http://www.cra-arc.gc.ca/E/pub/tg/t4130/t4130-e.html#P1149_144895


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## Charlie (May 20, 2011)

you'll to hash it out with your employer then. 

If they agree it is calculated solely for your travel to/from Edmonton, meets whatever reasonableness provisions apply, the job is temp in nature etc and the amount is exempt under the section you noted, then the T4 is in error. 

If, however, they contend it is a more general allowance, as they've reported it on the T4, you've a fight with CRA and/or your employer coming up. It's usually the employer who gets to make these determinations (subject to CRA concurring), so make sure your employer and you are in full agreement that it qualifies before you bring CRA into the mix.

I'm just pointing out that it's plausible it doesn't qualify, or that your employer has concluded it doesn't. And that such a scenario is consistent with what's been reported on your T4. 

A T1-Adjust will not really help you unless they later amend the T4. Basically, if you're convinced you're right and your employer refuses to amend (presumably being in agreement with your interpretation, but incorrect on how to fill out the forms), then report the 'correct' amounts on your return. Consider recording the full T4 as reported and a 'negative' T4 for the amount reported in error so that the net is correct but they don't just adjust when they match to what your employer has filed. In all likelihood you're triggering a call from CRA to your employer. Possibly a payroll audit. And unless your employer fully agrees that it should be exempt you've a tough battle with CRA ahead.

Good luck.


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