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.
March 9, 1993
Source Deductions Division |
A. Bissonnette |
Director |
R.B. Day (613) 957-2136 |
Attention: E. Hammond
Child Care Expenses - Taxable Benefits
We are writing in reply to your memorandum of January 26, 1993, with respect to the enquiry from the Victoria District Office concerning whether or not employer reimbursed child care expenses would be considered to be taxable benefits to the recipients thereof in the situations described in their E-Mail message.
Our understanding of the facts in this case is as follows:
XXXXXXXXXX the employer has agreed to reimburse an employee's additional child care costs in certain situations.
1. An employee is requested or required by the employer to attend a course outside the headquarters or geographic location, such that the employee incurs additional child care expenses.
XXXXXXXXXX
2. An employee attends a course approved by the employer outside the employee's normal work day such that the employee incurs additional child care expenses.
XXXXXXXXXX
In both situations the employee is required to submit a receipt as proof of payment for the child care expenses incurred.
DISTRICT OFFICE POSITION
It is the D.O.'s view that there would be no taxable benefit accruing to an employee in the first case but that a taxable benefit would accrue in the second situation because the course was not required by the employer.
OUR COMMENTS
It is the Department's position, generally, that a reimbursement by the employer of child care costs incurred by an employee constitutes a taxable benefit received by that employee. However, we have accepted that where the expense is incurred as a result of a requirement on the part of the employer to have an employee travel out of town on business, a reimbursement of such costs will not be treated as a taxable benefit.
On the basis that the employee's out of town attendance at the course is required by the employer and could be considered to be of a business nature, we agree with the District Office position that, in the first situation, a taxable benefit would not accrue to the employee. With respect to the second situation, we also agree with the District Office that a taxable benefit would accrue to the employee because the employee would appear to be the prime beneficiary of the course taken.
In this regard, we believe that an analogy can be drawn between these two situations and the comments in paragraph 19 of IT-470R.
B.W. Dath Director Business and General DivisionRulings DirectorateLegislative and Intergovernmental Affairs Branch
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