26 March 2001 External T.I. 2001-0069095 - INTERNET PAID BY EMPLOYER

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:

Employer, a college, pays fees to Internet Service Provider (ISP) for internet in employee's home under two scenarios. Is this a taxable benefit?

Position TAKEN:

Question of fact. Probably no taxable benefit.

Reasons FOR POSITION TAKEN:

As per Income Tax Technical News 13, if the employer is the primary beneficiary of the internet service being provided to the employee, then likely not a taxable benefit. Otherwise, taxable.

XXXXXXXXXX 2001-006909
T. Young, CA
March 26, 2001

Dear XXXXXXXXXX:

Re: Employer-paid Internet Service Provider (ISP) Fees

This is in reply to your letter of January 26, 2001, requesting our views on whether the payment of ISP fees by an employer for internet access in an employee's home would constitute a taxable benefit.

In your letter you present the two scenarios:

1. The employee is reimbursed in full for the monthly ISP fee. The employee is a senior officer of XXXXXXXXXX (the "College") and needs to be available 24 hours a day, 7 days per week.

2. The employee uses the internet in his or her home to contact students, other employees or business contacts and one or more of the following applies:

• Computing hardware and software is the instructional content and access to the internet is essential for the faculty role.
• Computer hardware and software is the method of instructional delivery and access to the internet is essential for the faculty role.
• Computer hardware and software is the method of service delivery and access to the internet is essential for the employee role.

Our Comments

The particular circumstances in your letter on which you have asked for our views appear to be factual situations involving specific taxpayers. As explained in Information Circular 70-6R4 dated January 29, 2001, it is not this Directorate's practice to comment on proposed transactions involving specific taxpayers other than in the form of an advance income tax ruling. Should your situation involve specific taxpayers and completed transactions, you should submit all relevant facts and documentation to the appropriate Tax Services Office for their views. However, we are prepared to provide the following general comments, which may be assistance to you.

Except where the Income Tax Act provides otherwise, taxpayers are generally taxable on the value of all benefits they receive by virtue of their employment. Whether or not an employee is receiving a taxable benefit when their employer pays an expense on the employee's behalf is a question of fact and can only be determined on a case-by-case basis upon review of all the relevant facts. However, when determining whether or not an employee is receiving a taxable benefit, we would generally consider the reason the employer is paying or reimbursing the expense and who is the primary beneficiary of this payment. In the situations outlined, it is our view that it is unlikely that there is any significant taxable benefit to the employees.

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