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 proposed 6(1)(a)(vi) would exempt employee discounts provided by elementary and secondary schools from inclusion in an employee's income as a taxable benefit?
Position: Yes, as long as the benefit is not a substitute for salary, wages or other remuneration and the employee deals with the employer at arms length.
Reasons: Current wording of draft legislation and policy intent.
XXXXXXXXXX
Dear XXXXXXXXXX :
The office of the Honourable James M. Flaherty, Minister of Finance, forwarded to me a copy of your correspondence, which I received on January 24, 2012, concerning the proposed addition of subparagraph 6(1)(a)(vi) to the Income Tax Act. I also received your emails of February 2 and 16, 2012.
You ask how this proposed subparagraph affects employees of independent elementary or secondary schools who receive tuition discounts for their children.
The proposed subparagraph has yet to be passed by Parliament. If the subparagraph is passed as currently worded, the tuition discounts that an elementary or secondary school gives to its employees' family members will generally no longer be considered a taxable benefit for the employee. However, the discount must not be a substitute for an employee's salary, wages, or other remuneration, and the employee must deal with the employer at arm's length.
If it is passed, the subparagraph would apply to employment benefits the employee received or enjoyed on or after October 31, 2011.
I trust that the information I have provided is helpful.
Yours sincerely,
Gail Shea, P.C., M.P.
Minister of National Revenue
Cynthia Underhill
905-721-5197
File # 2012-043509
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