8 May 2002 External T.I. 2002-0134225 - EMPLOYEE'S SPOUSE TRAVEL BENEFITS

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 a benefit is received by employees as a result of the employer paying the cost of their spouses' travel expenses. There is an expectation from the employer that spouses accompany the particular employees to meetings and, while there, participate in work-related activities.

Position: Given such employment conditions, it is likely that there would be no taxable benefit to the employees as a result of the spouses accompanying them on trips. However, each trip must be considered individually, and the facts must show that the employer requested the employee's spouse to make a particular trip, and the main purpose of the request was so that the spouse could assist in attaining the business objectives of the trip.

Reasons: Our position in IT-131R2.

XXXXXXXXXX 2002-013422
J. Gibbons, CGA
May 8, 2002

Dear XXXXXXXXXX:

We are replying to your letter dated February 27, 2002, in which you requested clarification of the position in section 2.22 of the 2001-2002 "Employer's Guide - Taxable Benefits" (the "Guide") that, where a spouse or common law partner (hereinafter referred to as a "spouse") accompanies an employee on a business trip, a reimbursement of the spouse's travel expenses is not a taxable benefit if the spouse went at the request of the employer and was mostly engaged in business activities during the trip.

Our comments are of a general nature only since we cannot confirm the tax implications of particular transactions unless the transactions are proposed and are the subject matter of an advance ruling request submitted in the manner set out in Information Circular IC 70-6R4.

In your letter, you stated that the XXXXXXXXXX is a national organization XXXXXXXXXX in Canada. The governing bodies and various committees and boards of XXXXXXXXXX and its members associations are made up of volunteers who are in turn supported by paid employees. Your particular concern relates to spousal travel for the President of the Board of Directors, who is a non-remunerated volunteer, and the Chief Executive Officer (CEO), who is a paid staff member.

Our Comments

The basis for our position in section 2.22 of the Guide is paragraph 6(1)(a) of the Income Tax Act. Pursuant to this provision, the value of any benefits received or enjoyed by a taxpayer in respect of, in the course of, or by virtue of an office or employment, must generally be included as income from an office or employment. Section 2.22 of the Guide refers to paragraph 8 of Interpretation Bulletin IT-131R2, "Convention Expenses", for additional information. This paragraph states that where an employee's spouse accompanies the employee on a business trip, the payment or reimbursement by the employer of the spouse's travelling expenses is a taxable benefit to the employee unless the spouse went on the trip at the request of the employer and it can be established that the main purpose of the spouse's attendance was to assist in attaining the business objectives of the trip.

You stated in your letter that there is an expectation from your Board of Directors and constituent members that spouses of your President and CEO accompany them to meetings and, while there, participate in networking to foster respect and cooperation between your volunteers. In our view, given such employment conditions, it is likely that there would be no taxable benefit to the President and CEO as a result of their spouses accompanying them on trips. However, each trip must be considered individually, and the facts must show that the employer requested the employee's spouse to make a particular trip, and the main purpose of the request was so that the spouse could assist in attaining the business objectives of the trip.

We trust that these comments will be of assistance.

Yours truly,

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

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