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:
Whether the Department's position expressed in Paragraph 35 of IT-470R on the non-taxability of employment-related moving expense reimbursement is dependent on the recipient satisfying the tests set out in section 62 of the Act.
Position TAKEN:
The position in the IT, although not dependent on section 62, technically, generally use the same criteria with respect to the distance test as a guide. Where circumstances fall outside those guidelilnes the onus is on the employer/employee to show that the employee received no economic benefit.
Reasons FOR POSITION TAKEN:
The position in the IT stems from the 1967 Ransom case which pre-dates the moving expense deduction legislation.
941546
XXXXXXXXXX J.A. Szeszycki
Attention: XXXXXXXXXX
August 2, 1994
Dear Sirs:
Re: Reimbursed Moving Expenses
This is in reply to your letter of June 13, 1994 in which you requested confirmation of the tax treatment accorded reimbursements to employees of relocation expenses incurred in the course of an employment related move.
XXXXXXXXXX
It is your understanding that where an employer reimburses an employee in respect of an employment related move, such a reimbursement would not be considered a taxable benefit in the hands of the employee. It is your view that this understanding is supported by the comments contained in paragraph 35 of Interpretation Bulletin IT-470R "Employees' Fringe Benefits". You have asked us to confirm that your understanding is correct, that the reimbursement of employment-related relocation expenses under the circumstances described in the collective agreements can be regarded as non-taxable employment benefits.
When considering whether, in a particular set of circumstances, a reimbursement of moving expenses by an employer is a taxable benefit to the employee, we generally look to the criteria described in section 62 of the Act as a guide. We do, however, recognize that where it can be established that, as a result of events initiated by the employer, the employee is faced with a greater hardship, the reimbursement of removal expenses in such circumstances may be considered not to confer an economic benefit to the employee.
As you will note in paragraph 35 of IT-470R, to which you refer, the circumstances under which the reimbursement of removal expenses would not be considered a taxable benefit involve situations where employees have been transferred to or accepted jobs in new work locations and moving expenses have been incurred as a consequence. It will always be a question of fact as to whether a particular employee's residence move is as a consequence of the job relocation or some other more personal reason. Where the distance of the move is substantially less than 40 kilometres the onus will be on the employee to show, for taxation purposes, that the primary reason for the move is the job relocation and the hardship imposed by it. It is our understanding from our telephone conversations (Szeszycki/XXXXXXXXXX) that it is the policy at XXXXXXXXXX that a reimbursement of removal expenses by the company will not be made unless it is satisfied that the move was prompted by the change in the regular work location of the employee.
The earlier statute reference is to the Income Tax Act 1970-71-72, c.63 as amended, consolidated to June 10, 1993. We hope our comments will clarify the Department's position on the matter.
Yours truly,
P.D.Fuoco
for Director
Business and General Division
Rulings Directorate
Policy and Legislation Branch
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