29 January 2003 External T.I. 2003-0183825 - REIMBURSEMENT OF PERMANENT RESIDENT

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 payment of permanent residence authorization fees by employer would constitute a taxable employment benefit

Position: Yes

Reasons: Reimbursement of a personal expense is a taxable benefit. Unlike work permit and visa fees, permanent residence authorization fees is not a reasonable relocation expense.

XXXXXXXXXX Wayne Antle, CGA
2003-018382
January 29, 2003

Dear XXXXXXXXXX:

Re: Payment of Permanent Resident Authorizations by Employer

This is further to your letter of January 20, 2003, in which you request a written ruling as to whether payment of an employee's fees to obtain a permanent residence visa would constitute a taxable employment benefit to the employee.

As noted in Information Circular IC 70-6R5, an advance income tax ruling will only be considered when it is in respect of a specific proposed transaction, and submitted in the manner set out in this circular. However, we will provide you with the following comments, which are not binding on the Canada Customs and Revenue Agency ("CCRA").

Paragraph 6(1)(a) of the Income Tax Act (the "Act") includes in an employee's income the value of any benefit received or enjoyed by the employee in respect of his or her employment. It is our view that, where an employer reimburses an employee for the cost of a personal expense incurred by the employee, or where such an expense is paid directly by their employer, then the employee will normally be considered to have received a taxable employment benefit.

In our previous letter to you (File No. 2002-013774), we indicated that payment of an employee's work permit fees, and visa fees for his spouse and children, would not constitute an employment benefit when paid as part of the employee's reasonable relocation costs. This is consistent with our policy outlined in paragraph 35 of Interpretation Bulletin IT-470R (Consolidated) Employees' Fringe Benefits.

It appears that the fees paid to obtain a permanent residence visa are not part of the employee's relocation costs. These are personal expenditures incurred by the employee to enable him or her to acquire permanent residence status in Canada. Accordingly, the reimbursement of these fees would be considered a taxable employment benefit, and would be required to be included on the employee's T4 slip.

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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