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 taxable benefit where employer arranges for third party to provide discounted fitness passes to group of employees and employer does not absorb discount; the amount of the discount depends on the size of the group
Position: no
Reasons: the employer is not absorbing any costs relating to the discount; the benefit is merely that the employer "bundles" the employees together so that they can obtain a group discount offered by a third party and would be at most a de minimus benefit
XXXXXXXXXX 2005-015406
Denise Dalphy, LL.B
February 1, 2006
Dear XXXXXXXXXX:
Re: Discounted Fitness Pass Memberships
We are writing in response to your e-mail of October 11, 2005 wherein you requested our opinion on the income tax consequences where an employer provides its employees with the option to purchase discounted fitness pass memberships from the XXXXXXXXXX.
You have advised that the employer will pay all of the membership fees up front and will recover the full amount of the discounted passes from the employees, either by payroll deduction (over 10 pay periods) or by cheque. In essence, the employer is simply banding its employees together so they may receive a group discount on fitness pass memberships offered by the XXXXXXXXXX, and the employer absorbs none of the costs of the fitness passes.
We agree with your view that, in the circumstances described above, there would be no taxable benefit to the employees in respect of the group discount enjoyed on the fitness passes.
We trust our comments will be of assistance to you.
Yours truly,
Randy Hewlett,
for Director
Business and Partnerships Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch
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