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 a proposed payment of income tax by an employer on behalf of employees, which will arise as a result of the inclusion in their income of taxable benefits associated with employer-paid meals, is also a taxable benefit?
Position: Yes.
Reasons: Paragraph 6(1)(a) of the Act.
XXXXXXXXXX 2006-018814
October 31, 2006
Dear XXXXXXXXXX:
Re: Taxable Benefits
We are writing in response to your correspondence of May 24, 2006, wherein you asked whether a proposed payment of income tax by an employer on behalf of employees, which will arise as a result of the inclusion in their income of taxable benefits associated with employer-paid meals, is also a taxable benefit.
Paragraph 6(1)(a) of the Income Tax Act requires that the value of benefits received by an employee in the course of employment is to be included in the computation of the employee's income. Except where the Act provides otherwise, employees are generally taxable on the value of all benefits they receive by virtue of their employment. In the situation described above, the employer's payment of income tax on the taxable benefit would also be required to be included in income as a taxable benefit.
We trust that these comments will be of assistance.
Yours truly,
Randy Hewlett
for Director
Business and Partnerships Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch
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