Is living-out allowance (LOA) taxable in Canada?

When LOA is tax-free

Most union LOA, subsistence and board allowances are paid because the job is too far from home to drive every day. The Income Tax Act lets an employer leave a reasonable board and lodging allowance out of your income when you work at a special work site ¹. CRA lists the conditions, and all of them have to fit ²:

• The work is temporary. CRA counts the duties as temporary when they aren't expected to give you steady work there for more than 2 years ².
• You keep a home somewhere else. It's your principal residence, it stays available to you the whole time, and you don't rent it to anyone ^1,2.
• It's too far to go home every day. CRA generally says more than 80 km by the usual route is too far. It can still accept less, after looking at your shift length, the rest you'd get, the road and the weather, your health and the travel time ².
• You're away at least 36 hours, counting the travel between home and the site ^1,2.
• The amount is reasonable, and it's for board and lodging you actually pay for ^2,3.

A camp far from any town has its own version of the rule. CRA generally calls a work location remote when it's 80 km or more from the nearest community of at least 1,000 people ⁴. At a remote work location the employer doesn't use a TD4 ³.

Form TD4

Form TD4, Declaration of Exemption – Employment at a Special Work Site, is how your employer leaves the allowance out of your income. You and the employer fill it out when you start at the site, or when your situation there changes ⁵. The employer keeps it with your payroll records. Nobody sends it to the CRA ^2,5.

With a TD4 done, the allowance doesn't go in box 14 of your T4 ². If tax is coming off your LOA on your first stub of a call that should qualify, ask the payroll office about the TD4 right away.

When LOA is taxed

If the conditions don't all fit, the employer doesn't fill out a TD4 and the allowance counts as your income. The same goes for any part of an allowance that's more than a reasonable amount ³. A few ways that happens:

• You live close enough to drive to the site each day ².
• You don't keep a home somewhere else, or you rent it out while you're away ^1,2.
• The job isn't temporary, because it's expected to give you steady work there for more than 2 years ².

A taxed cash allowance is treated like wages. Income tax, CPP and EI come off it, and it shows on your T4 in box 14, with code 30 for board and lodging or code 40 for other taxable allowances ².

Getting some back: the labour mobility deduction

The labour mobility deduction is for tradespeople and apprentices in construction who pay their own way to work away from home ⁶. Starting with the 2026 tax year, the law allows up to $10,000 a year, and your temporary lodging has to be at least 120 km closer to the work site than your home ^8,9,10. For 2025 the limits were $4,000 and 150 km ⁶. The $10,000 goes up with inflation from 2027 ⁹.

When we checked, CRA's guide and Form T777 still showed the 2025 numbers ^6,7. The 2026 numbers come from the Act itself ⁸.

• You're a tradesperson or apprentice with employment income from construction work ⁶.
• You're away from home at least 36 hours, in temporary lodging in Canada ⁶.
• You keep your home as your principal residence, it stays available to you, and you don't rent it out ⁶.
• What counts: the temporary lodging, one round trip between home and the lodging, and your meals on that trip ⁶.
• For each relocation, the deduction can't be more than half of what you earned at that job. Costs you can't use one year can carry over to the next year for the same relocation ^6,8.

To claim it, fill out the labour mobility part on page 2 of Form T777 and put the result on line 22900 of your return ^6,7.

Where a taxed LOA matters. The Act doesn't let you claim a cost that an allowance pays for, unless that allowance was included in your income ⁸. So a tax-free LOA blocks the lodging it covers, but a taxed LOA doesn't. CRA's guide states the rule without that exception ⁶. If your LOA was taxed and you plan to claim, keep your T4 and pay stubs and check with a tax preparer before you file.

A worked example