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.
Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department. Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.
932633
XXXXXXXXXX
December 13, 1993
Dear XXXXXXXXXX
Re: Taxation of Transfer Allowance
We are writing in response to your letter of September 1, 1993, regarding the taxability of the transfer allowance which you received from your employer upon relocating to XXXXXXXXXX We regret the delay in replying.
As we understand it, the transfer allowance is a Treasury Board approved benefit payable to all members of the R.C.M.P. when relocated under the provisions of the R.C.M.P. Relocation Directive. It is based on the employee's substantive rate of pay on the day before departure and is calculated at the rate of 1/12th or 1/24th of one year's salary for those who relocated depending on whether or not dependents are involved in the move. It is paid in recognition of a variety of factors associated with employee relocation, including the long term social and financial effects of relocation on R.C.M.P. members and their families, as well as actual personal costs which may be incurred in the course of moving but which are not reimbursed under the criteria of the R.C.M.P. Relocation Directive. The allowance is in the nature of a non- accountable incidental expense allowance. It is our view that the R.C.M.P. transfer allowance is properly taxable as remuneration from employment.
We assume that the "Two recent rulings from Revenue Canada" referred to in your letter are actually recently decided court cases involving reimbursed relocation expenses. Both of these cases (The Queen v. Phillips 93 DTC 5247 and Lao 93 DTC 5251) have been appealed by the Department to the Federal Court of Appeal.
A recent decision which is more relevant to your situation involved a relocation allowance received by an R.C.M.P. officer (McLay v. MNR 92 DTC 2261). The employee received a transfer allowance of $4,166.58 upon being transferred from Vancouver, British Columbia to St. John's, Newfoundland. This amount represented one twelfth of the employee's salary. According to the Court the three conditions for a payment to be regarded as an allowance had been met and the amount was considered to be an allowance that was subject to tax under paragraph 6(1)(b) of the Income Tax Act.
We trust our comments will be of assistance to you.
Yours truly,
P.D. Fuoco for Director Business and General Division Rulings Directorate Legislative and Intergovernmental Affairs Branch
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