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 employer-paid educational costs are benefits to employee and deductible to employer.
Position: Question of fact.
Reasons: Income Tax Technical News, No. 13.
May 3, 2006
Re: Employer-Paid Educational Costs
This is to confirm the outcome of our telephone conversation of April 28, 2006 regarding your questions about the tax treatment of employer-paid educational costs. As we discussed, the answer in these cases depends on the facts of the situation.
Employer-paid educational costs fall into three broad categories: specific employer-related training, general employment-related training, and personal interest training. Under the guidelines on employer-paid educational costs relating to employment benefits taxed under paragraph 6(1)(a) of the Income Tax Act, employer-paid courses that are either specifically employer-related or generally employment-related are not treated as a taxable benefit. Employer-paid courses for personal interest training, on the other hand, would result in a taxable benefit to the employee.
As far as the expensing of costs is concerned, this too is fact driven. Where the courses taken lead to a person obtaining a degree or professional designation with the result that the person can then perform work that is directly related to the employer's line of work, the cost might be treated as a capital expense. In your particular case, the cost of the human resource management courses, which you are taking, would likely not involve a capital expenditure.
As agreed, I am attaching a copy of the Income Tax Technical News, No. 13, which outlines the Canada Revenue Agency's technical interpretation on employer-paid educational costs. I trust your questions have been addressed to your satisfaction.
Business Incentives and
Capital Transactions Section
Income Tax Rulings Directorate
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