Income Tax Severed Letters - 2005-01-28

Principal Issues: Clarification with respect to a recently published technical interpretation (2004-010115), wherein it was stated that if an employee is required to use his or her vehicle 3 or more days on a weekly basis for employment-related travel and requires the parking space for this purpose, the parking space would be considered to be used regularly for employment-related reasons and therefore, the employee would not be in receipt of a taxable benefit. Was this a 5 or 7-day week? If an employee who does not necessarily use his or her vehicle 3 or more days on a weekly basis qualify if the employee used it more than an acceptable percentage of time during the year?

Position: The reference to a week was in reference to a 5-day normal workweek. This was meant to be a general guide, such that an employee who is required to use the parking space for employment-related reasons more than half the number of workdays during a week, would be considered to have regularly used the space that week. This simply relieves the employer and employee from determining the amount of the benefit, if any, that otherwise would have to be included in income in respect of the personal use of the space for that week. Another benchmark could be appropriate, depending on the circumstances. What may be acceptable is a question of fact.

Principal Issues: Whether the non-taxable status of a PHSP provided through a HCSA will change where employees have certain rights in respect of the balance of credits in the HCSA?

Position: Question of fact.

Reasons: A HCSA that provides employees with inherent rights to the balance of credits in their account will not qualify as a PHSP. One of the criteria that a plan must meet to be considered a PHSP is that it be a plan of insurance, and a plan that provides employees with rights in respect of the balance of credits in the HCSA is not a plan of insurance. The only right that employees may have is to get reimbursed for eligible medical expenses under the terms of the plan. As well, when a HCSA provides for a carry forward of unused credits for a period not exceeding 12 months, this will not disqualify the plan as a PHSP solely because of the carry forward provision. Also, the status of a plan as a PHSP is unaffected as a result of the employer extending coverage to retired employees.

Principal Issues: Whether certain prizes paid to amateur athletes are taxable under paragraph 56(1)(n) of the Act?

Position: Question of fact. Such a determination can only be made with a complete knowledge of all the facts as they pertain to an individual taxpayer, but in this case it is likely.

Reasons: The wording of paragraph 56(1)(n) of the Act is sufficiently broad that it could encompass prizes awarded to amateur athletes under any of the circumstances described by the correspondent. The prizes are likely amounts received by the taxpayer for an achievement in a field of endeavour ordinarily carried on by the taxpayer and are not a prescribed prize.

Principal Issues: Whether a taxable benefit results in respect of the personal use of an employer-provided motor vehicle that is not considered an automobile because it is a clearly marked emergency-response vehicle by virtue of paragraph (b.1) of the definition of automobile in subsection 248(1) of the Act?

Position: Yes.

Reasons: Notwithstanding the fact that such an employer-provided motor vehicle may not be an automobile, a benefit in respect of the personal use of such vehicle will result in a taxable benefit that must be included in the employee's income under paragraph 6(1)(a) of the Act.

Principales Questions: Voir ci-dessous

Position Adoptée: Voir ci-dessous

Raisons: Voir ci-dessous

Principales Questions: Est-ce que les conditions énumérées aux alinéas 4803(2)a) à d) du Règlement sont cumulatives.

Position Adoptée: Non.

Raisons: Emploi de la conjonction "ou" entre les alinéas c) et d). Interprétations antérieures.

Principales Questions: Interprétation du paragraphe 1 de l'Article XXIV de la Convention fiscale entre le Canada et la France.

Position Adoptée: Commentaires généraux.

Raisons: Article XXIV de la Convention fiscale entre le Canada et la France et Article 24 du Modèle de convention fiscale de l'OCDE et les commentaires s'y rapportant.