28 June 2006 Ministerial Correspondence 2006-0181611M4 - Employee Housing Loss

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: Application of subsections 6(19) to 6(22) of the Income Tax Act sections to payments received during the period of February 23, 1998 to December 31, 2000.

Position: An employer-paid housing loss is fully taxable unless it is paid for an eligible relocation, generally in which case, the first $15,000 is not taxable and one-half of the excess amount is taxable. A payment made before February 23, 1998, is not taxable under the new rules, as well as any payment made on or before December 31, 2000, for an eligible relocation if employment at the new work location began before October 1998.

Reasons: Provisions are applicable to the 2001 and subsequent taxation years in respect of an eligible relocation of an individual in connection with which the individual begins employment at a new work location before October 1998; and in any other case, after February 23, 1998.

Signed on June 28, 2006

XXXXXXXXXX

Dear XXXXXXXXXX:

Thank you for your correspondence of April 5 and May 25, 2006, concerning the application of subsections 6(19) to 6(22) of the Income Tax Act.

The above subsections were added to clarify the taxation of employee benefits received for employer-paid housing losses. Specifically, you are concerned with how these rules apply to payments received during the period of February 23, 1998 to December 31, 2000. Previously, an employee would generally not be taxed on the reimbursement of an actual housing loss incurred upon being required by the employer to move to another location for work related reasons.

In applying the new rules, the concept of "eligible relocation" is important. This term generally means a relocation to allow an individual to carry on a business, to be employed or to be a full-time post-secondary student at a university, college or other educational institution (the "new work location"), if both the individual's old residence and new residence are located in Canada and the new residence is located at least 40 kilometres closer to the new work location than the old residence. Under the new rules, an employer-paid housing loss is fully taxable unless it is paid for an eligible relocation, generally in which case, the first $15,000 is not taxable and one-half of the excess amount is taxable. A payment made before February 23, 1998, is not taxable under the new rules, as well as any payment made on or before December 31, 2000, for an eligible relocation if employment at the new work location began before October 1998.

The application of these provisions of the Act is explained in detail in Interpretation Bulletin IT-470R (Consolidated), Employees' Fringe Benefits, which is available on the CRA's Web site at www.cra.gc.ca/E/pub/tp/it470r-consolid/. You can obtain a copy at your local CRA tax services office, where officials can assist you on how the rules may apply to your situation.

In your letter of May 25, you raise additional concerns about whether you were fairly treated regarding the housing loss you received compared to other employees. The confidentiality provisions of the Income Tax Act prohibit me from providing information about specific taxpayers without their written authorization.

I trust that the above information will be helpful.

						Yours sincerely,

						The Honourable Carol Skelton, P.C., M.P.

c.c.: Minister's Office
Political Assistant

Randy Hewlett
613-957-2049
2006-018161