CRA substantially rewrites its Bulletin on “Fringe Benefits”

CRA’s new Folio on Benefits and Allowances Received from Employment replaces IT-470R entitled “Employees’ Fringe Benefits” (a phrase which CRA no longer uses). Although there are extensive and substantial changes as compared to IT-470R, this Folio nonetheless does not represent much new. Although the Folio also states that it replaces Income Tax Technical News No. 40, most of the policies in ITTN No. 40 are continued. In addition, various topics which were dealt with in ITTN No. 40 or IT-470R are not brought forward to the Folio and are instead dealt with in referenced web pages on the CRA site. The emphasis in the Folio has shifted somewhat to statements of broader principle, often as enunciated in decisions of the Federal Court of Appeal, including:

• Benefit recognition generally requires generally requires receipt of an economic advantage measurable in monetary terms of which the employee is the primary beneficiary (Lowe)
• “something…provided to an employee primarily for the benefit of the employer…will not be a taxable benefit if any personal enjoyment is merely incidental to the business purpose” (McGoldrick)
• the value of a benefit is its fair market value (Spence)

However, CRA is silent on its judicial authority for a restrictive statement of when a shareholder may receive a benefit qua employee.

Neal Armstrong. Summaries of S2-F3-C2, Benefits and Allowances Received from Employment under s. 6(1)(a), s. 6(1)(a)(iv), s. 6(1)(a)(vi), s. 6(1)(b) and s. 6(1)(b)(v).