21 September 2016 External T.I. 2016-0640201E5 - Taxable benefits - travel employer-paid trip

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: What is the relevance of the employee’s job description and senior management authorization in determining whether an employer-paid trip is a taxable benefit?

Position: Question of fact.

Reasons: See response.

XXXXXXXXXX							2016-064020
								A. Ryer
September 21, 2016

Dear Mr. XXXXXXXXXX:

Re: Taxable benefits – travel

We are writing in response to your correspondence of March 30, 2016, wherein you asked for our comments on whether the value of an employer-paid trip for an employee to attend the trip as XXXXXXXXXX attending the trip is a taxable benefit to the employee. In particular, you asked whether the employee’s job description and requirement of senior management’s authorization for the employee to attend the trip are factors used in determining whether the employer-paid trip is a taxable benefit.

Our Comments

This technical interpretation provides general comments about the provisions of the Income Tax Act (the 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 a particular transaction 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 70-6R7, Advance Income Tax Rulings and Technical Interpretations.

Generally, the value of benefits of any kind received or enjoyed by a taxpayer in respect of employment is included in a taxpayer’s income from employment under paragraph 6(1)(a) of the Act, unless the benefit is specifically exempted under the Act or the employer is determined to be the primary beneficiary of the benefit.

Although no single factor may be conclusive, a positive answer to one or more of the following questions may suggest that the employer is the primary beneficiary of the benefit:

• Does the employer have a business purpose for providing the benefit?
• Is the benefit required for the employee to perform the employment duties more effectively?
• Is the benefit required to fulfill a condition of employment?
• Does the employer have a moral or contractual obligation to provide the benefit to ensure that employees are not unduly subject to harm from performing the employment duties?

Where an employer requires an employee to take a trip for employment-related reasons, the employer is the primary beneficiary of the trip. In such cases, the employee is engaged directly in employment activities during a substantial part of each day of the trip. However, where an employee receives a trip as an employment incentive or award, the employee is the primary beneficiary of the trip. If the employee is required to perform employment duties during that trip, any benefit included in the employee’s income may be reduced for any actual employment-related activity.

To determine who is the primary beneficiary of an employer-provided trip, all of the relevant facts must be reviewed on a case-by-case basis. It is the employer's responsibility to determine whether the employer required an employee to take a trip for employment-related reasons or whether the employer provided the trip as an employment incentive or award. In determining whether an employee’s presence on a trip was employment-related, the employee’s job description and senior management’s authorization to take the trip may be factors to consider, although they may not be determinative factors.

For additional information, please refer to paragraphs 2.23-2.25 of Income Tax Folio S2-F3-C2, Benefits and Allowances Received from Employment, which is available on the CRA website.

We trust these comments will be of assistance to you.

Yours truly,

Nerill Thomas-Wilkinson, CPA, CA
Manager
Business and Employment Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch