[JohnDearin]

HELP!!

This client of mine, now residing in Alberta tells me she receives a LOA (living out allowance) that is paid to her company. She then writes a cheque to herself to pay for lodging, meals etc.

Is this something specific to Alberta, or is this just a regular reimbursement for living expneses? She keeps telling me the cheque from her Contractor is noted "LOA"

Regards

John Dearin

[David Blue]

JohnDearin, on Feb 14 2007, 01:00 PM, said:

HELP!!

This client of mine, now residing in Alberta tells me she receives a LOA (living out allowance) that is paid to her company. She then writes a cheque to herself to pay for lodging, meals etc.

Is this something specific to Alberta, or is this just a regular reimbursement for living expneses? She keeps telling me the cheque from her Contractor is noted "LOA"

Regards

John Dearin

I have a lot of clients that have the same thing. It is a regular item in Alberta. Different accountants handle it in different ways. When you say Company I am assuming that means, LTD. as most are in Alberta, What some do is have a minute written up in the minute book that states an Loa will be paid equal to X $ per day. In and out. I bring it into income but expense out all other expenses, Travel flights, meals, housing.. Good luck, either way have fun with the audit that will be coming as these all seem to do. They are also paid GST on this amount in most cases. On a T2124 I have just written off the amount straight out to the client as an expense. I also have them sign a letter that informs them that C.R.A. may audit them for this expense and may request actual receipts and that they may disallow this expense write off. That is how I C.Y.A. I hope that this helps.

[Kevin Pedersen]

David Blue, on Feb 14 2007, 09:10 AM, said:

I have a lot of clients that have the same thing. It is a regular item in Alberta. Different accountants handle it in different ways. When you say Company I am assuming that means, LTD. as most are in Alberta, What some do is have a minute written up in the minute book that states an Loa will be paid equal to X $ per day. In and out. I bring it into income but expense out all other expenses, Travel flights, meals, housing.. Good luck, either way have fun with the audit that will be coming as these all seem to do. They are also paid GST on this amount in most cases. On a T2124 I have just written off the amount straight out to the client as an expense. I also have them sign a letter that informs them that C.R.A. may audit them for this expense and may request actual receipts and that they may disallow this expense write off. That is how I C.Y.A. I hope that this helps.

The super duper agent at CRA indicated that the federal ceiling on LOA is around $412 per month, unless you can prove this is unreasonable. A copy of the real estate listings for rental units may help show how reasonable it is. The super agent also indicated that it is taken in a general revenue, paid to the employee as a general expense, and that you claim ITC for the GST you are not passing on (i.e. $3200 a month including GST to the company, $3200 a month no GST to the employee).

Having been audited on this myself, there are a few rules and conditions that must be met. We discussed this last fall on the old forum. (i.e. Special Work Sites vs. Remote Work Sites, rules for secondary residence, etc.). It-91R4 has some good information at the CRA website.

Sorry if I'm off topic here. Or out of touch.

[David Blue]

Kevin Pedersen, on Mar 10 2007, 05:07 PM, said:

The super duper agent at CRA indicated that the federal ceiling on LOA is around $412 per month, unless you can prove this is unreasonable. A copy of the real estate listings for rental units may help show how reasonable it is. The super agent also indicated that it is taken in a general revenue, paid to the employee as a general expense, and that you claim ITC for the GST you are not passing on (i.e. $3200 a month including GST to the company, $3200 a month no GST to the employee).

Having been audited on this myself, there are a few rules and conditions that must be met. We discussed this last fall on the old forum. (i.e. Special Work Sites vs. Remote Work Sites, rules for secondary residence, etc.). It-91R4 has some good information at the CRA website.

Sorry if I'm off topic here. Or out of touch.

I will jump into this fray with both feet. Pleae dont beat me up to badly.

Was at the Devaney tax update seminar: Yes you have to watch the special work site / remote site rules : He is recommending to flowi directly out to a person from a corp the entire LOA regardless of amount and is doing the same thing with indiviguals from T2124's Tax exempt. Right or wrong. I am not saying. I have been doing this for years and it does seems to work. This subject was brought up at the Edmonton tax seminar on 21 Feb. This may not work next year as Fort McMurray's status is about to change.

[melissagreen]

Hello everyone,

I know this thread is quite old but I was wondering if anyone can give me an idea or a range on what CRA considers "Reasonable" for someone from Atlantic Canada, working in Alberta with regards to Living Allowances. Or even just a living allowance for remote work locations.

Thanks a bunch :)

Melissa Green
Staff Accountant
Hillier & Associates

[unknown]

This is a high abuse, lack of legislation area...

By lack of legislation, I mean there is really no provision for this 'living out allowance', but CRA so far has been 'allowing' it.

Used to be just Fort Mac. Lately it has been spreading...

'Reasonable'? Depends on the mood of the auditor...