17 February 2004 Internal T.I. 2003-0054301I7 - Reimbursing an employee's pilot training

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.

Principal Issues: Whether reimbursements paid to an aviation and avionics technician for civilian pilot training is a taxable benefit.

Position: Question of fact, but likely not.

Reasons: According to the employer, there is no benefit to them.

	Revenue Collections	HEADQUARTERS
	XXXXXXXXXX  TSO	J. Gibbons, CGA
(613) 957-2135
	Attention:  XXXXXXXXXX
		2003-005430

Reimbursement of an employee's cost for private pilot training

This is in response to your emails dated December 23 and 29, 2003, concerning an enquiry from a personnel officer at XXXXXXXXXX (the "Employer") about the taxability of reimbursements paid to an employee (the "Employee") for civilian pilot training. It is the Employer's view that the reimbursements are taxable employment benefits.

Facts

? The Employee is an aviation and avionics technician whose duties involve working on air frame structures.

? The Employee is entitled to a reimbursement of costs for civilian pilot training (up to a maximum of $XXXXXXXXXX for every year of service) from the XXXXXXXXXX.

? The Employee has no plans of becoming a pilot XXXXXXXXXX but will remain as a technician. (In fact, the Employee can not apply to be a XXXXXXXXXX pilot because he does not hold a university degree.)

? The Employee is of the view that civilian pilot training is a non-taxable benefit.

? The Employer is of the view that pilot training undertaken by "XXXXXXXXXX" (which would include the Employee) would not benefit the Employer at all.

Your views

After reviewing Interpretation Bulletin IT-470R, Employees' Fringe Benefits (Consolidated), Income Tax Technical News No. 13 (ITTN #13), and the Employer's Guide - Taxable Benefits, you agree with the Employer that the reimbursement of civilian pilot training costs would be a taxable employment benefit. You are of the view that the training can not be characterized under either of the non-taxable categories of training as set out in ITTN #13, i.e., specific or general employment-related training. Rather, you refer to the training as a "nice to know" but "not directly or (even indirectly) related to job responsibilities." You also referred to the statement in ITTN #13 that it is an employer's responsibility to determine the taxability of employer-paid training costs.

Our views

Based on the facts provided, we agree with you that the reimbursement of the Employee's costs for civilian pilot training does not appear to fall under either of the non-taxable categories of employer-paid educational costs. We also agree that it is the employer's responsibility to determine whether reimbursed educational costs should be treated as a non-taxable benefit, since they are in possession of all of the relevant facts.

With respect to the question you raised about the eligibility of the costs of civilian pilot training for the tuition tax credit, as indicated in paragraph 29 of IT-516R2, Tuition Tax Credit, fees paid by or on behalf of students enrolled at a qualifying flight training school or club will only qualify for the credit if the student is taking the training in order to become a commercial pilot or professional instructor.

We trust that our comments will be of assistance.

Wayne Antle, CGA
Manager
Partnerships Section
Business and Partnerships Division
Income Tax Rulings Directorate
Policy and Planning Branch