2 February 2015 External T.I. 2014-0552421E5 - City uniforms - footwear

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: Is employer provided footwear a taxable benefit to an employee?

Position: Question of Fact, in this case, likely yes

Reasons: See response

XXXXXXXXXX
2014-055242
P. Waugh

February 2, 2015

Dear XXXXXXXXXX

Re: City uniforms

We are writing in response to your letter dated October 21, 2014, concerning whether employer-provided footwear is a taxable benefit to an employee.

In the situation described, an employer supplies uniforms (shirts, pants, and jackets), which are distinctive (i.e., the clothing contains employer identification), to employees. The employer does not supply footwear but requires employees to wear a specific type (e.g., high cut or low cut) of black footwear as part of the uniform. An employee can either obtain the footwear through the employer's preferred supplier (e.g., employer pays for the footwear), or purchase the footwear and be reimbursed by the employer. The footwear has no employer identification and is not required for safety or protective measures.

Our Comments

This technical interpretation provides general comments about the provisions of the Income Tax Act (Act) and related legislation (where referenced).  It does not confirm the income tax treatment of a particular situation involving a specific taxpayer but is intended to assist you in making that determination.  The income tax treatment of particular transactions proposed by a specific taxpayer will only be confirmed by this Directorate in the context of an advance income tax ruling request submitted in the manner set out in Information Circular IC 70-6R6, Advance Income Tax Rulings and Technical Interpretations.

Subject to certain exceptions, employment benefits, whether provided in-cash or in-kind, are generally included in an employee's income under paragraph 6(1)(a) of the Act. CRA's longstanding position is that clothing is a personal expense if the clothing is regular clothing that can be worn for non-business purposes outside business hours. As a consequence, we generally consider that the employee receives a taxable employment benefit when the employer provides or reimburses the cost of such clothing.

An employee does not receive a taxable benefit if:

• The employer provides an employee with a distinctive uniform to wear while carrying out employment duties (e.g., clothing which identifies the employer); or
• The employer provides an employee with special clothing (including safety footwear and safety glasses) which is designed to protect the employee from hazards associated with the employment.

Since the employer-provided footwear (i.e., paid for directly or reimbursed by the employer) does not appear to fall into one of the above categories, it would be a taxable benefit to the employee.

We trust these comments will be of assistance to you.

Yours truly,

Nerill Thomas-Wilkinson, CPA, CA
Manager
Business and Employment Income Section
Business and Employment Division
Income Tax Rulings Directorate