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.
Principal Issues:
1.Whether provision of special clothing (uniforms and safety footwear) constitutes a taxable benefit to the employee
2.Whether a non-accountable allowance for uniform dry cleaning and maintenance constitutes a taxable benefit to the employee
3.Whether a non-accountable personal grooming allowance constitutes a taxable benefit to the employee
4.Whether the cost to the employee of purchasing special clothing and for personal grooming is deductible under para. 8(1)(i) of the Act
Position TAKEN:
1.No.
2.No, to the extent it is reasonable and actually expended.
3.Yes.
4.No.
Reasons FOR POSITION TAKEN:
A combination of the Department's position already set out in IT's 470R and 352R as well as the consequences of the court decision in the Huffman case, 1990.
941545
XXXXXXXXXX J.A. Szeszycki
Attention: XXXXXXXXXX
July 26, 1994
Dear Sirs:
Re: Safety Footwear and Uniforms Allowance
This is in reply to your letter of June 10, 1994 in which you requested confirmation of the correct income tax treatment related to the employer's provision of uniforms and safety boots or allowances in respect thereof.
Under the collective agreement between the employer, XXXXXXXXXX, and the Union representing the employees certain XXXXXXXXXX employees are required to wear safety footwear when carrying out their duties of employment. Each of these employees is to receive a safety footwear allowance of $XXXXX per year. When the safety footwear is purchased it is required to be inspected by the employee's supervisor in order to ensure the footwear purchased is in compliance with the Canada Occupational Health & Safety Regulations (C.S.A. approved). The allowance is not sufficient to cover the full cost of the footwear.
You have asked us to confirm that the safety footwear allowance provided under these circumstances is not required to be included in the income of the employee. You made specific reference to paragraph 29 of interpretation bulletin IT-470R "Employees' Fringe Benefits" as support for your conclusion.
Under the same collective agreement certain employees are required to wear dress uniforms while on duty.
XXXXXXXXXX
You have asked us to confirm that (i) an employee who receives a uniform free of charge is not considered to be receiving a taxable benefit, (ii) an employee who is required to pay one-half the cost of the uniform is entitled to a deduction in computing income under paragraph 8(1)(i) of the Income Tax Act, (iii) the uniform dry cleaning and maintenance allowance is not considered a taxable benefit to the employee (paragraph 30, IT-470R), and (iv) the personal grooming allowance is not considered a taxable benefit or, in the alternative, it may be deducted by the employee in computing income under paragraph 8(1)(i) of the Act.
In the comments that follow, unless otherwise stated, all statute references are to the Income Tax Act 1970-71-72, c.63 as amended, consolidated to June 10, 1993.
IT-470R, at paragraph 29, describes the situation where the special clothing (or safety footwear) is supplied to an employee by the employer pursuant to a requirement by the employer that such clothing be worn as protection against the potential hazards of the employment. Under these circumstances the employee is not regarded as receiving a taxable benefit. This position has been extended to cover situations where the employer reimburses the employee for purchases of special clothing upon presentation of proof of purchase. It is also our view that, where an employee receives a non-accountable allowance in respect of special clothing, or safety footwear, the allowance will not be required to be included in income to the extent that the allowance is reasonable and was actually expended for the purchase of the special items.
Paragraph 30 of the same bulletin describes the situation where employees are reimbursed for cost of laundry or dry cleaning of special clothing (upon presentation of receipts to the employer). Such a reimbursement is not considered to be a taxable benefit to the employee. Again, it is the Department's position that, where a non-accountable allowance is provided for this purpose, it will not be considered a taxable benefit to the extent that it is reasonable and was actually expended for that purpose.
Consequently, it is our opinion that, under the particular circumstances that you describe:
(1)The provision of the uniform, free of charge or at less-than-cost, will not result in a taxable benefit in the hands of the employee.
(2)The provision of an allowance in respect of safety footwear required to be worn by the employee will not constitute a taxable benefit to the employee to the extent that it is expended on the required footwear.
(3)The allowance in respect of dry cleaning and uniform maintenance will not constitute a taxable benefit to the extent that it is expended for that purpose.
With respect to both allowances referred to in (2) and (3) above the amounts not actually spent for the purpose provided are required to be included in the income of the recipient.
We are not able to confirm the non-taxability of the personal grooming allowance. Unlike special clothing costs, it is not considered that an individual's personal grooming costs are incurred exclusively as a result of job requirements. Consequently, an allowance provided for this purpose would be considered a taxable benefit in the hands of the recipient.
Generally, subject to certification, subparagraph 8(1)(i)(iii) of the Act enables an employee to deduct from the income of a taxation year from an office or employment the "cost of supplies that were consumed directly in the performance of the duties of his office or employment..." As explained in paragraph 4 of IT-352R "Employees' Expenses Incurred in Performing Duties of Employment", a copy of which is enclosed for your reference, the word "supplies" as used in this provision is limited to materials that are used up directly in the performance of the duties of employment but does not include special clothing customarily worn by employees in the performance of their duties. In addition, there is no provision within paragraph 8(1)(i) of the Act that would permit a deduction in respect of personal grooming costs.
We hope our comments have clarified the Department's position on these matters.
Yours truly,
P.D. Fuoco
for Director
Business and General Division
Rulings Directorate
Policy and Legislation Branch
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