23 May 1990 Administrative Letter 900396 F - Impact of Employer Sponsored Child Care Assistance

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.

Dear Sirs:

Re:  Health and Welfare Canada Study Impact of Employer Sponsored Child Care Assistance under the Income Tax Act

This is in reply to your letter of April 12, 1990, wherein you requested our comments concerning the income tax treatment of benefits provided by employers to employees in respect of child care in a variety of hypothetical situations.

As indicated to you in our meeting on May 2, it is our current view that, where an employer establishes an in-house child care facility, defrays all operating expenses of that facility and further makes such facility available to all employees gratuitously or for a minimal fee, a taxable benefit would not arise in the hands of such employees.

For this purpose, an "in-house" facility is considered to include premises which are leased by the employer.

At the present time, we are not prepared to extend this view to cover situations outlined in the attachment to your letter (e.g.-separate corporations, a consortium of employers, etc.) which do not fit the above conditions.  In fact, as we mentioned at our meeting, we are in the process of examining our current position to ensure that it is consistent with our general position concerning non-taxable fringe benefits conferred on employees.  If any change results from this review we will advise you.

We trust that the comments in this letter and in our meeting will assist you with the preparation of your response to Health and Welfare Canada.  If we can be of further assistance to you please do not hesitate to contact us.

Yours truly,

for DirectorBusiness and General DivisionSpecialty Rulings DirectorateLegislative and Intergovernmental Affairs Branch