Principal Issues: Employer operates a ski resort and is in the business of providing recreational facilities to the public. Employer gives free recreational passes to all its employees and their family members. Is there a taxable benefit to the employees pursuant to paragraph 6(1)(a) if the employee’s employment duties are administrative/retail and the use of the pass is not directly related to the performance of the employee’s duties? If free passes are provided to family members of all employees, is there a taxable benefit to the employee?
Position: Question of fact as to whether the employer or the employee is the primary beneficiary of the free recreational pass. However, in this case, the employer indicates that knowledge of the resort by all employees is essential for performing their duties of employment. In addition, the Department has a long-standing position that if free recreational passes are provided to all employees and not to a selected group of employees, then there is no taxable benefit to the employees. This is outlined in IT-148 and IT-470.
Reasons:. The determination of whether there is a taxable benefit to an employee is a question of fact that would depend on whether the employee or the employer is the primary beneficiary of the free recreational pass. As the employer has indicated that knowledge of the resort and ski hill are essential for all employees to perform their employment duties, it is reasonable to assume that the employer is the primary beneficiary. With respect to free passes to family members of employees, in our view, the employees are the primary beneficiaries of such a benefit and as such, the value of the pass is a taxable benefit in the hands of all employees whose family members receive such passes pursuant to paragraph 6(1)(a) of the Act.
