4 July 1989 Internal T.I. 58257 F - Taxation of Employment Benefits

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.

July 4, 1989

Dear sirs:

This is in reply to your letter of June 15, 1989 wherein you requested income tax rulings in respect of the taxation of certain payments made by 24(1) to 24(1)

We would first like to point out that an advance income tax ruling, which when given is binding upon the Department, may only be provided when the procedures for its request are complied with. A proper request entails the provision of all related documents for our review as well as an identification of all of the specific provisions of the Income Tax Act (the "Act") in respect of which the request is to be considered. The procedures are discussed at length in our Information Circular IC-70-6R, which was referred to you.

Since your request was not submitted as required we are unable to provide you with any rulings at this time. We, can however, provide our general view in respect of the taxability of payments made in your circumstances.

As stated in fact 3 of your submission, under the terms of the agreement the employees may 24(1)

Since it is the employee who may purchase the additional service, to the extent that the employer's payment is made on his behalf and will be cost, it will be considered have been made on his behalf and will be taxable to him as a taxable benefit under paragraph 6(1)(a) of the Income Tax Act (the "Act"). The amount taxable to the employee in any year will be limited to the amount actually paid in that year by the employer in respect of the employee's cost. An equal amount may then be eligible for deduction in accordance with and to the extent allowed by paragraph 8(1)(m) of the Act as that provision reads in the year in which the cost is actually paid. Since no particulars of the "optional service" or of the "employee cost" thereof were submitted, we are unable to confirm the deductibility of these amounts. For example, no deduction could be made in respect of Past Service - Additional Voluntary Contribution made on or after October 9, 1986 under proposed amendments to be made to the Act.

As stated above, the foregoing reflects the Department's views as they apply generally. It is not, however, an advance income tax ruling and it is not binding upon the Department.

Yours truly,

for DirectorFinancial Industries DivisionRulings Directorate