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 Department.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.
Principal Issues: (1) What is the appropriate form (T4 or T4A) to be produced by a third party relocation services provider in respect of taxable benefits paid to the employees of the person for whom the services are provided?
(2) Who is responsible for withholding and remitting taxes on any taxable benefits provided to an employee (the third party services provider or the employer using the provider)?
Position: (1) T4 slip.
(2) The employer
Reasons: Answer is based on the assumption that the third party relocation services provider is an agent of the employer using the provider to help the employer's staff to relocate.
J. E. Grisé
January 10, 2001
Re: Third Party Service Provider
This is in reply to your letter of November 9, 2000, requesting a technical interpretation pertaining to the payroll compliance reporting of certain taxable benefits.
You have provided us with the following facts:
- The Government of Canada (GOC) currently has a policy to implement a relocation program to transfer its employees within and outside Canada for employment purposes.
- The relocation program is designed to provide the employees with professional assistance throughout every step of the relocation with the view to incur the most reasonable cost to the public, yet presenting the employees with every opportunity to maximize the available benefits.
- A third party relocation services provider, hereinafter referred to as the "Agent", has been retained to assist with the delivery of the relocation program, as well as the payroll reporting compliance for the program.
- The Agent, which is governed by the provisions of two separate departmental policies dealing with the relocation of government employees, administers the relocation program on behalf of the GOC to provide certain relocation services to various of its employees.
- The departmental policies comprise two components, namely the Core component and the Customized component. Under both policies, the relocation expenses are reimbursed/paid, directly or indirectly, by the Agent to or for the GOC employees on the basis of full reimbursement of the Core component based on entitlement and/or reimbursement of the Customized component based on the employees individual funding envelope.
- The Core expenditures and Customized funding envelopes are funded by the GOC pursuant to the relocation program, and the employees are required to itemize their relocation expenses in accordance with the provisions of the relevant policies. The reimbursements/payment made by the Agent may result in taxable benefits to the employees under the provisions of the Income Tax Act (the Act).
It is a question of fact as to whether a person is an agent of another person. For purposes of this reply we are assuming that the third party relocation services provider is the agent of the GOC.
In our view, any taxable benefit conferred on a GOC employee by the Agent should be reported on a T4 slip. Such a benefit is in effect being conferred by the GOC on its employees through its Agent. For the same reason, the obligation to withhold and remit income tax (and other applicable withholdings) on the taxable relocation benefits on a timely basis would be with the GOC. However, the GOC may engage the Agent or any other agent to fulfil its withholding and reporting obligations.
We hope our comments are helpful.
John Oulton, CA
Business and Publications Division
Income Tax Rulings Directorate
Policy and Legislation Branch
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