Living Out Allowance (Contractors ONLY)

If you work in the Oil and Gas industry you have undoubtably heard of Living out Allowance (LOA).  This blog is dedicated to contractors only.  The purpose of LOA is to help with costs associated with working away from home.  Typically a contactor will add the LOA to their invoices, or it is automatically included as part of their hourly charge out rate.  Because you are charging "extra" for LOA you are able to deduct the expenses.

Recently it has come to my attention that some professionals are peddling advice contrary to what I am telling you above.   "They are wrong".  Even if you are not billing for LOA any cost you incur in order to generate revenue is deductible.  If you live in Calgary, Edmonton, Vancouver, Toronto, somewhere in between, New Foundland, or Timbuktwo, and travel to Ft. McMurray, or any place else for that matter, you get to deduct your travel, accomodation, and meal costs incurred at the work location.  The simple fact is that if you travel away from where you live to work and generate income while doing so, then the associated costs are deductible.  I cannot make in any clearer than what is stated above.

The bottom line with corporations and expenses according to the Income Tax Act paragraph 18(1)(a), "sorry to bore you with technobable", if the expense is incurred to earn business income then it is deductible.  If you are told otherwise then run away.

If you have specific questions you can email us, but I really can't make this any clearer.