11 July 2002 External T.I. 2002-0141785 - CHILD CARE EXP. 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 the reimbursement of child care expenses for a director of a union or other non-profit organization is considered a taxable employment benefit under paragraph 6(1)(a) of the Income Tax Act.

Position: Yes.

Reasons: Based on previous interpretations for other types of employees.

XXXXXXXXXX 2002-014178
J. Gibbons, CGA
July 11, 2002

Dear XXXXXXXXXX:

We are replying to your letter dated May 16, 2002, concerning the reimbursement of child care expenses for a director of a union or other non-profit organization (NPO). You wish to know whether the amount of the reimbursement will constitute a taxable employment benefit under paragraph 6(1)(a) of the Income Tax Act. In this regard, you provided the following information:

? The director is a member of the organization but not an employee.

? Directors attend directors meetings which are held on a regular basis.

? The organization has a policy to reimburse a director for amounts paid by the director for child care services which permit the director to attend a meeting.

? The amount reimbursed is a set amount regardless of the actual cost.

? The director must submit a chit to request the reimbursement.

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 70-6R5.

Paragraph 6(1)(a) provides that the value of all benefits received or enjoyed by an individual in the course of an office or employment is required to be included in the individual's income. Thus, it is our view that an employee must generally include the value of employer-paid child care in income. An exception to the general rule regarding the taxation of employment benefits is provided in the 2001 income tax guide, Completing the Registered Charity Information Return, and applies generally to directors of charities and NPO's. Page 16 of this guide indicates that reimbursements of directors' expenses in connection with out-of-town accommodation and travel expenses while attending a board meeting will not be considered taxable employment benefits.

We trust that these comments will be of assistance.

Yours truly,

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

??

- 2 -