27 January 2005 External T.I. 2004-0108921E5 - Housing Benefit - Loss Of Quiet Enjoyment

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 the value of a taxable housing benefit received by student dons at a university could be reduced because the nature of the duties results in a loss of quiet enjoyment?

Position: Yes.

Reasons: Within the scope of the CRA guideline published in the Employers' Guide: Taxable benefits 2003-2004.

XXXXXXXXXX 					2004-010892
								Randy Hewlett, B.Comm.
		613-941-7239
January 27, 2005

Dear XXXXXXXXXX:

Re: Taxable Benefit For Housing - Loss Of Privacy Or Quiet Enjoyment

We are writing in response to your letter of December 21, 2004, wherein you asked for our opinion on the above-noted issue as it pertains to student dons who are employed by the XXXXXXXXXX and provided with free room and board in exchange for their services.

Your letter indicated that the student dons are hired to manage the student residences on campus. The duties of the student dons are such that they deal with noise complaints, handle lock-outs and lost keys, submit work orders for repairs, mediate disputes with roommates, proof-read essays, meet with house councils, assist in organizing social events, provide academic advice and deal with other emergencies as they arise. Student dons may use their own rooms whenever they meet with a student or student groups. The nature of their duties is such that they may be called on anytime. In the past, the student dons have been T4'ed a taxable benefit equal to the amount that other students pay for the free room and board. On the basis of the CRA's general position on this topic that is outlined in the Employers' Guide: Taxable benefits 2003-2004 (the "Guide"), you inquired whether the value of the benefit could be reduced because the nature of the duties of the student dons results in a loss of "quiet enjoyment".

Our Comments

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 are prepared to offer the following comments.

Paragraph 6(1)(a) of the Income Tax Act (the "Act") includes in a taxpayer's income the "value of board, lodging and other benefits of any kind whatever received or enjoyed by the taxpayer in the year in respect of, in the course of, or by virtue of an office or employment." The value of a taxable benefit for free board and lodging should generally approximate its fair market value. As noted in the Guide, there may be special circumstances where it is appropriate to reduce the value of a housing benefit. For example, if the dwelling contains equipment, public access, or storage facilities that infringe on the employee's privacy or quiet enjoyment of the dwelling, a reduction in the value of the benefit is appropriate. In our view, given the nature of the duties of the student dons as described in your letter, it would be appropriate to reduce the value of the benefit they receive. We would like to emphasise that the reduction of benefit must be reasonable in the circumstances and should only apply to the portion of the benefit related to the free room. The CRA's policy in the Guide does not apply to the portion of the benefit that may relate to free meals.

We trust our comments will be of assistance to you.

Yours truly,

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