30 August 2002 External T.I. 2002-0137745 - REIMBURSEMENT OF WORK PERMIT 2 VISA FEES

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 reimbursement of work permit charges and visa fees for an employee and his family constitutes taxable employment benefits where the employee moves to Canada to commence work with the employer

Position: Not a taxable benefit

Reasons: Paragraph 35 of IT470R provides that the payment of reasonable removal expenses to move an employee and his family would not be a taxable benefit where the employee moves as a result of starting employment with a new employer. We have previously given opinions that this policy applies where an employee moves into Canada. Since the employee cannot work in Canada without obtaining the work permit, and his family cannot enter Canada without a visa, these costs can be considered as part of the reasonable removal expenses.

XXXXXXXXXX 2002-013774

August 30, 2002

Dear XXXXXXXXXX:

Re: Payment of Work Permit Charges and Visa Fees by Employer

This is in response to your letter of April 29, 2002, concerning whether the reimbursement of work permit charges and visa fees would be considered taxable employment benefits, when such reimbursements are made to a new employee who has moved from South Africa to Canada to take up employment at XXXXXXXXXX.

In your letter, you make reference to paragraph 35 of Interpretation Bulletin IT-470R (Consolidated), which sets out the administrative position of the Canada Customs and Revenue Agency ("CCRA") with respect to the reimbursement of removal expenses. Essentially, where an employer reimburses an employee for the reasonable expenses incurred by the latter in moving the employee and the employee's family and household effects, either because the employee has been transferred from one establishment of the employer to another, or because of having accepted employment at a place other than where the former home was located, this reimbursement is not considered as conferring a taxable benefit on the employee.

You wish us to consider whether the reimbursement of the cost of obtaining a work permit for an employee, and visas for an employee's family would fall within this policy.

Our Comments

The situation presented in your letter appears to be a factual one involving specific taxpayers. As explained in Information Circular 70-6R5, 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. However, we are prepared to offer the following general comments, which are not binding on the CCRA.

In our view, the costs incurred by an employee of obtaining a work permit and visas for his or her immediate family members would be considered part of the employee's reasonable relocation costs. Accordingly, where an employer reimburses an employee for the cost of obtaining a work permit to enable an employee to commence employment in Canada with the employer, such a reimbursement would not constitute a taxable employment benefit to the employee, and would not be included on the employee's T4 information slip. Similarly, where the employer also pays for the cost of obtaining visas for the employee's spouse and children, this payment would not be considered a taxable employment benefit.

We trust that our comments will be of assistance.

Yours truly

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