28 August 1989 Ruling 58273 F - Employee Benefit - Low-cost Accommodation

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.

August 28, 1989

Re:  Low Cost Accommodation

Your enquiry of February 5, 1989 concerning the above-noted topic, addressed to the Toronto District Office, has been forwarded to us for a reply.  We apologize for the delay in responding.

An advance income tax ruling will only be issued in respect of proposed transactions.  A request for an advance ruling must be submitted in accordance with the procedures outlined in Information Circular IC70-6R. A copy is enclosed for you. Our current fee is $65.00 per hour and a deposit of $325.00 is required.  We are prepared, however, to offer our opinions to your queries.

A superintendent employee of a condominium complex is assessed a taxable benefit by his employer to reflect the value of accommodation received or enjoyed by the employee in respect of, in the course of, or by virtue of his office or employment. You have asked whether the valuation of this benefit may be reduced for the following reasons:

i)     The superintendent is required to live in the condominium unit because he is on call 24 hours per day;

ii)       The unit is used to conduct some Corporation business such as making repair arrangements, assisting residents and so forth, and,

iii)      The unit forms part of the common elements of the complex and is not a designated rental unit.

In accordance with Interpretation Bulletin IT-470R, paragraph 6, the employer is responsible for reasonably estimating the amount of such a benefit, which would normally be considered to be the fair market rent for equivalent accommodation had the employee rented from a third party less any rent paid.  In this case, if we accept that, as stated in your letter  24(1)

We are of the opinion that extenuating circumstances may allow a reduction of the market value placed on a dwelling.  For instance, the market value may be reduced if the employee tenant is subjected to a loss of privacy and quiet enjoyment (such as necessarily being available to other tenants and to repairmen outside normal working hours).  The amount of reduction available would be based on the facts and circumstances surrounding each case (with consideration being given to the frequency and degree of loss of privacy and quiet enjoyment, for example).  Your local district taxation office could assist you in determining the most appropriate reduction although this determination is customarily left with the employer.  The fact that the unit may not be rented out to another non-employee tenant by the employer because the unit forms part of the common elements of the complex in no way reduces the value of the benefit received or enjoyed by the employee; therefore, a reduction to the market value of the dwelling or, in effect, to the taxable benefit should not be made.

As an employee earning a salary, you are limited to the kinds of deductions you may make from employment income.  Section 8 of the Income Tax Act (the "Act") is the authority for allowing specific deductions from income from an office or employment.  We have enclosed a copy of the 1988 Employment Expenses Tax Guide. Although there are no readily apparent deductions available to a superintendent employee, you may wish to read chapter two of the enclosed guide for assistance in this regard.

Should you require additional assistance, please contact the North York district office's source deductions enquiries line at 367-9990 or write to:

     Revenue Canada TaxationP.O. Box 705736 Adelaide Street East Toronto, Ontario M5C 2V4

     Attention: Source Deductions

We trust that the above comments are of assistance to you.

Yours truly,

for DirectorSmall Business and General DivisionSpecialty Rulings DirectorateLegislative and IntergovernmentalAffairs Branch