29 January 2010 External T.I. 2009-0337371E5 - Passport Application Fees

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: Taxability of an employer's reimbursement of an employee's costs to obtain a Canadian passport.

Position: While a question of fact, where it can be reasonably established that the payment or reimbursement of such costs is primarily for the employer's benefit or advantage, no taxable benefit would result.

Reasons: The law.

XXXXXXXXXX 							2009-033737
								Michael Cooke, C.A.
January 29, 2010

Dear XXXXXXXXXX :

Re: Employer's Reimbursement of a Passport Application Fee

We are writing in response to your email of August 19, 2009, wherein you requested our comments on the taxability of an employer's payment or reimbursement of an employee's cost to obtain a Canadian passport.

Written confirmation of the tax implications inherent in particular transactions is given by this Directorate only where the transactions are proposed and are the subject matter of a request for an advance income tax ruling submitted in the manner set out in Information Circular 70-6R5, "Advanced Income Tax Rulings", dated May 17, 2002. This Information Circular and other Canada Revenue Agency ("CRA") publications can be accessed on the internet at http://www.cra-arc.gc.ca. Where the particular transactions are complete, the inquiry should be addressed to the relevant tax services office, a list of which is available on the "Contact Us" page of the CRA website. Notwithstanding the foregoing, we are prepared to provide the following comments.

Where an employer pays or reimburses an employee's cost to obtain a Canadian passport (the "passport application fee"), such payment or reimbursement would ordinarily result in a taxable benefit to the employee under paragraph 6(1)(a) of the Income Tax Act (the "Act") as it would represent a payment on account of a personal or living expense of the employee. However, if as a specific condition of employment with an employer, an employee is required to have a valid Canadian passport in order be able to perform the duties of such employment, we would need to consider whether the employer's payment or reimbursement of that employee's passport application fee in the particular circumstances would be primarily (i.e., generally meaning more than 50%) for the employer's advantage or benefit.

While the determination of the application of paragraph 6(1)(a) of the Act must generally be made on a case-by-case basis, where an employee, such as a flight attendant or pilot, for example, is required to perform most of his or her duties of employment while working on international flights, the employer's payment of reimbursement of that employee's passport application fee would generally be considered as being primarily for the employer's benefit or advantage. Accordingly, in such circumstances, the CRA would generally be inclined to accept that no taxable benefit would result under paragraph 6(1)(a) of the Act. However, where the employee's duties of employment are carried out primarily on domestic flights, the employer's payment or reimbursement of the employee's passport application fee would generally not be considered as being primarily for the employer's benefit or advantage. In those circumstances, a taxable benefit would result.

We trust these comments will be of assistance.

Yours truly,

Renée Shields
for Director
Business and Partnerships Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch