Income Tax Severed Letters - 2013-10-30

Principal Issues: Whether the taxpayer qualifies for the OETC? Determination of a qualifying period of more than six consecutive months as required by subsection 122.3(1) of the Act.

Position: Question of fact. A qualifying period may include a period of preparatory work, a sick leave and/or a holiday period in Canada and the employee may still remain eligible for the OETC provided that, throughout such qualifying period, substantially all of the individual's employment duties (90% or more) are performed outside Canada in connection with a qualifying activity of the employer.

Reasons: Application of the Act and review of all relevant facts. The employer's contract to carry on business outside Canada, as well as the employee's duties and employment contract are all relevant to the determination of whether or not a qualifying period exists.

Principal Issues: Are employees in receipt of a taxable benefit when the employer reimburses their monthly cell phone plan and the phone is required to perform their employment duties?

Position: Question of fact but probably no.

Reasons: The amount would be a reimbursement of an expense related to employment duties which is not taxable.

Principal Issues: Whether a taxable benefit would arise where an employer offers its employees a credit card with a discounted interest rate, relative to that ordinarily charged to non-employee cardholders?

Position: Where the credit card is a loan for purposes of subsection 80.4(1), any benefit so determined by virtue of this provision is included in income under subsection 6(9). Where the provisions of subsection 80.4(1) of the Act do not apply, the value of a benefit received by an employee in respect of a reduced interest rate may be assessed pursuant to paragraph 6(1)(a) of the Act.

Reasons: Revolving credit instruments such as credit cards constitute loans for purposes of subsection 15(2) and by extension, appear to be loans for purposes of subsection 80.4(1). It is always a question of fact, however, whether such loans have been received because of an office or employment. Where the provisions of subsection 80.4(1) do not have application, a benefit may be included under paragraph 6(1)(a).