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: Will there be a taxable benefit to an employee where an employer reimburses the employee for a portion of the purchase of a Palm Pilot to assist in managing his time more efficiently?
Position: Yes.
Reasons: ITA 6(1)(a)
2004-009622
XXXXXXXXXX Luisa A. Majerus, CA
(613) 957-2138
December 8, 2004
Dear XXXXXXXXXX:
Re: Taxable Benefit - Palm Pilot
This is in reply to your email dated September 16, 2004, requesting confirmation that the reimbursement by XXXXXXXXXX (the "Employer") to an employee up to $XXXXXXXXXX to purchase a Palm Pilot or equivalent device would be a taxable benefit to the employee.
Written confirmation of the tax implications inherent in particular transactions is given by this Directorate only where the transactions are proposed and are the subject matter of an advance income tax ruling request submitted in the manner set out in Information Circular 70-6R5, Advance Income Tax Rulings, dated May 17, 2002. Where the particular transactions are completed, the inquiry should be addressed to the relevant Tax Services Office. However, we offer the following general comments.
Paragraph 6(1)(a) of the Income Tax Act (the "Act") includes in computing the income of an employee the value of any benefit received or enjoyed in respect of his or her employment. It is our general view that an employee will be considered to have received a taxable employment benefit when an employer reimburses the employee for part, or all, of the cost of an asset purchased and owned by the employee, notwithstanding that the asset may be partly used for employment-related purposes. In a similar manner, paragraph 23 of Interpretation Bulletin IT-470R (Consolidated) - Employees' Fringe Benefit, states that where an employer makes payments to an employee to offset the cost of tools that the employee is required to have in order to perform their work, the amount of the payment must be included in the employee's income. A copy of IT-470R can be found on our website at http://www.cra-arc.gc.ca/menu/APAP-e.html.
In your situation, the Employer will reimburse an employee up to $XXXXXXXXXX towards the cost of purchasing a Palm Pilot or equivalent device. In these circumstances, it is our view that the amount reimbursed by the Employer will result in a taxable benefit to the employee.
We trust this information is helpful.
Yours truly,
John Oulton, CA
For Director
Business and Partnerships Division
Income Tax Rulings Directorate
Policy and Planning Branch
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