energysolutions

I`m trying to decide on a potential move which seemed pretty clear cut at the outset but quickly got complicated so I need some accurate advice so I can make a calculated decision

First a little background - my wife and I have been in Canada for just over 2 years and received PR at the end of September via Express Entry. This happened just as my original employer ran out of work so I began applying for jobs and got hired with one of the bigger oil & gas companies where I start in early January

I will eventually be working on site up north (FIFO rotation which I am familiar with) but not until the middle of the year at the earliest as the project is not ready yet, so in the meantime I am going to their head office for what they refer to as a "Temporary Assignment" where I`ll receive training

As their office is not within commuting distance to where I currently live they will be providing me with a residence (apartment or whatever I imagine) for the duration. This first came up when I signed the contract and I had a casual conversation regarding this with the company representatives that were present. When they explained what would happen I said that we did not have any ties to where we live at present so was it possible that we simply move there and live in the company provided accommodation for the duration thus giving up our current property (a rental we can easily leave as the original contract has expired), this appeared to be well received and even encouraged

Fact is we`ve been looking to move anyway and while this move is not to where we want to end up its a to a decent place and its closer to our chosen area to live that we are at present

By doing this for ~6 months we stand to save a decent chunk of cash by not paying:

1) Rent

2) Utilities

3) For a second vehicle (I`d have to buy a second if I travel there each week and my wife stays where we are now)

So I`d pretty much made my mind up but the company rep who deals with relocations is strongly advising against this idea as I`d be taxed for using the company accommodation as my main residence (I`m guessing the CRA would view this as a "Benefit in kind" or whatever the correct term is and tax it accordingly)

Even so considering what I stand to save I imagine I`d still be well ahead even after paying taxes and possibly monthly storage fees for some of our belongings that would have to be put in storage while we live in a smaller apartment

Can anyone clarify what the CRAs position is on this issue and how to calculate (roughly) how much I`d be looking at so I can make an informed decision on this?

Thanks in advance

plasticcanuck

IMO, it would be classified as a Taxable Benefit..No doubt a taxes expert will be along to advise you further.

energysolutions

Thanks, I`m guessing you're correct, the CRA like their cut.....

JonboyE

Yes, if you do not have a residence elsewhere it is a taxable benefit. The benefit is the fair market value of the benefit you receive. Essentially, how much you work have to pay if you were renting from a third party landlord.

energysolutions

Thanks JonboyE

So to quantify that, if (plucking a figure from the sky) the company pays $1500/month in rent for the 6 month duration I`m there then I am liable to pay tax on $9000?

Assuming tax at 40% (plucking a figure out of the sky again) I would be looking at $3600?

Am I on the right page here?

Siouxie

I believe you would also pay taxes on the utilities provided.

Employers' Guide – Taxable Benefits and Allowances

JonboyE

Yes, that is about it. Siouxie is right that if the company pays other costs as well these will be added to the taxable benefits.

energysolutions

Pretty much as I expected then.

In simple terms worst case scenario is I am taxed (guessing 40%) on all the costs the company pays

Bottom line is I`m still ahead as I`d have to pay 100% of all those costs should I keep a second (main) residence

Thats not even factoring in the fact that essentially I`d be "home" every night too

I`m probably gonna find a local tax representative as I have a few matters to discuss and find out exactly what I`m looking at but thanks for the pointers.

Engineer_abroad

However I believe that expenses related to relocation for a job in Canada are tax except for a certain period. Not sure what it covers and I don't think it would stretch to the full 6 months but you could get something back in the early stages. Line 219 - Moving expenses

Aviator

Moving expenses for a permanent move can be deductible if one has to move to be closer to a job. However if the employer reimburses moving costs, this could also be considered income.

Steve_

Look, it's got to be cheaper to merely pay the income tax on a benefit-in-kind than the actual rent itself, unless the FMV of the rent is insanely high, so I'd just pay the income tax if I were you.

haggis88

Slightly off topic, but does this happen to be Suncors Fort Hills site?

PM me if you wish