16 October 2002 External T.I. 2002-0161785 - BENEFITS-MOVING EXPENSES

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CCRA.

Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ADRC.

Principal Issues:

Whether or not a new employee receives a taxable benefit when the employer reimburses the cost of moving personal belongings and household goods upon relocation to Canada from a location outside of the country.

Position:

No

Reasons:

Paragraph 35 of IT-470R

XXXXXXXXXX 2002-016178

Randy Hewlett, B.Comm.

October 16, 2002

Dear XXXXXXXXXX:

Re: Technical Interpretation - Moving Expenses

We are writing in response to your letter dated September 10, 2002, wherein you requested our opinion on the above-noted issue.

Your letter indicates that on June 1, 2002 your company hired an individual and reimbursed him "for the cost of moving his personal belongings and household goods from XXXXXXXXXX to XXXXXXXXXX" . You inquire whether or not the new employee will be considered to receive a taxable benefit for the reimbursement of the moving expenses. In particular, you are concerned whether or not the fact that the employee is moving from a location outside of Canada has an impact.

Our Comments

Written confirmation of the tax implications inherent in particular transactions is given by this Directorate only where the transactions are proposed and are the subject matter of an advance income tax ruling request submitted in the manner set out in Information Circular IC 70-6R5, Advance Income Tax Rulings. Where the particular transactions are completed, the inquiry should be addressed to the relevant Tax Services Office (TSO). However, we offer the following comments.

As noted in paragraph 35 of Interpretation Bulletin IT-470R, Employees Fringe Benefits, where an employer reimburses an employee for the expenses incurred in moving the employee and the employee's family and household effects because the employee has accepted employment at a place other than where the employee's former home was located, the reimbursement is not considered as conferring a taxable benefit on the employee. In our view, this applies to an employer-paid move of a newly hired employee from a location outside of Canada to the new employment location in Canada.

We trust our comments will be of assistance to you.

Yours truly,

John Oulton, CA
for Director
Business and Partnerships Division
Income Tax Rulings Directorate
Policy and Legislation Branch

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