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 purchase of computers with professional development funds of administrative officers of XXXXXXXXXX would give rise to taxable benefits when employer retains ownership of computers, and they are purchased fro work-related purposes.
Position: Question of fact. Where there is only incidental personal use, then there would be no employment benefit. Where personal use is more than just incidental, then there would be an employment benefit based on the amount of personal use.
Reasons: Personal use of equipment provided by employer falls within ambit of 6(1)(a).
October 26, 2001
Vancouver Island Tax Services Office HEADQUARTERS
Jan Williams Wayne Antle, CGA
Verification and Enforcement Division (613) 957-2102
2001-009977
Provision of Computers to Employees
This is in response to your memorandum of August 31, 2001, concerning whether any amount with respect to the purchase of computers with professional development funds for the use of administrative officers would be included in the income of the employees as a taxable benefit from employment.
XXXXXXXXXX summarized the facts in a letter to us dated April 14, 2000 (copy attached). Essentially, the administrative officers require personal computers in order to adequately carry out their employment duties. However, XXXXXXXXXX do not have sufficient funding to supply the necessary equipment. Therefore, they are encouraging the employees to use their professional development funds to purchase the computers where it can be demonstrated that they need the computers for employment purposes. In order to obtain funding for the computers, the administrative officers must sign a trust declaration indicating that they are holding the computers in trust for XXXXXXXXXX, and that the computers are used primarily for employment purposes. After a period of two or three years, being the substantial economic life of the computers, the employees have the option of purchase the equipment at its fair market value.
The determination of whether there is a taxable benefit to the employees can only be made after reviewing all of the facts. It is our view that an employee who uses professional development funds provided by his or her employer in order to purchase a personal computer will be considered to have received a taxable employment benefit where the employee owns the computer. However, where the employer retains ownership of the computer, there would be no benefit if an employee is provided with the computer in order to perform his or her employment duties, and the employee uses the computer all or substantially all of the time for employment-related purposes. On the other hand, where the employee makes more than incidental personal use of the computer, then there may be a taxable employment benefit with respect to such use. The value of the benefit would be dependant upon the amount of time the computer is used personally by the employee and his or her family.
For your information a copy of this memorandum will be severed using the Access to Information Act criteria and placed in the Legislation Access Database (LAD) on the Department's mainframe computer. A severed copy will also be distributed to the commercial tax publishers for inclusion in their databases. The severing process will remove all material that is not subject to disclosure including information that could disclose the identity of the taxpayer. Should your client request a copy of this memorandum, they can be provided with the LAD version or they may request a copy severed using the Privacy Act criteria which does not remove client identity. Requests for this latter version should be made by you to Jackie Page at (613) 957-0682. The severed copy will be sent to you for delivery to the client.
We trust that our comments will be of assistance.
John Oulton, CA
for Director
Business and Partnerships Division
Income Tax Rulings Directorate
Policy and Legislation Branch
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