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 the value of a travel voucher received by an employee is a taxable benefit
Position: In the scenarios provided, yes
Reasons: Received in respect of and by virtue of employment
2006-020650
XXXXXXXXXX Jack Szeszycki
(613) 957-8972
March 2, 2007
Dear XXXXXXXXXX:
Re: Travel Voucher Prize as a Benefit from Employment
We are responding to your letter of September 15, 2006, in which you requested our views as to the taxability of the value of travel vouchers received by employees under three different scenarios. We regret the delay encountered in providing you with a response.
The first scenario described an employer sponsored sales campaign in which every sale made by an employee represented a chance to win the travel voucher valued at $2,500. Consequently, while the chance of winning the prize increased with each sale, it is also dependent on the sales success of other participating employees. The winner of the prize is selected by a draw.
The second scenario involves a gathering of employees in celebration of a successful period for the business and the awarding of a travel voucher, as described above, as a door prize. Each employee attending the gathering is automatically entered into a draw for the prize. It is assumed, for this purpose, that only employees are eligible to participate and each employee has the same chance of being selected as the winner.
The third scenario is one where the company held a campaign to sell its preferred shares. Every share sold by an employee represented a chance to win the travel voucher. As in the first scenario, the chance of winning the prize increased with each sale, but was also dependent on the sales success of other participating employees. The winner of the prize is selected by a draw.
The Agency's position regarding the proper characterization and treatment of a prize acquired under the circumstances described in the three scenarios is contained in Interpretation Bulletin IT-213R, Prizes from lottery schemes, pool system betting and giveaway contests. Within that bulletin, paragraphs 6(b) and 10 are relevant in explaining that when an individual receives a prize in his or her capacity as an employee, that is, the prize would not be available but for the individual's actions or status as an employee, then the value of the prize is considered income from employment under section 5 and paragraph 6(1)(a). It is presumed, in each of the scenarios described above, that non-employees are not entitled to participate in the sales campaigns or the draws and therefore, the prizes would be taxable employment income of the employees who receive them.
We trust our comments will be of assistance to you.
Yours truly,
Randy Hewlett
For Director
Business and General Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch
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