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Alberta Living Out Allowance

#1 User is offline   JohnDearin Icon

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Posted 14 February 2007 - 01:00 PM

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
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#2 User is offline   David Blue Icon

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Posted 14 February 2007 - 04:10 PM

View PostJohnDearin, 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.
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#3 User is offline   Kevin Pedersen Icon

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Posted 10 March 2007 - 05:07 PM

View PostDavid 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.
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#4 User is offline   David Blue Icon

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Posted 10 March 2007 - 06:47 PM

View PostKevin 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.
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#5 User is offline   melissagreen Icon

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Post icon  Posted 13 January 2009 - 08:21 PM

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
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#6 User is offline   unknown Icon

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Posted 13 January 2009 - 08:40 PM

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...
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#7 User is offline   steakman Icon

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Posted 19 July 2012 - 01:30 AM

I have recently incorporated in Alberta - named company. I own a home in Calgary and that is my principal residence.

I have taken a contract in Fort McMurray (in City). I'm paid 200/day LOA when I am working. I only work 21 days straight and then typically get 7 off. However in order to keep my room (staying in a hotel) and pay a daily rate based on monthly stays (billed weekly), that comes close to 3400/month. Yea I know there is significantly cheaper accomodation in town but most if not all want a minimum 3 month lease and are the other side of the Athabasca river with absolutely stupid traffic to deal with every morning at 6AM. I see no reason to do so considering I have an open ended contract and and am not sure when it will end.

So. Is this money taxable.? If so, then all receipts (food -lodging), for living out of town in order to work would apply as 100% deductible expenses against said LOA right.?

Do I need to remit GST on it.? I note on my pay stub that I am only paid GST on my actual earnings and not on the LOA. But I'm simply not sure as to how CRA looks at this.

thank you,

stk
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