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:
Is reimbursement of employee's retirement counselling expense by the employer a taxable benefit?
Position TAKEN:
No.
Reasons FOR POSITION TAKEN:
Exemption provided for in 6(1)(a)(iv) of the Act
942101
XXXXXXXXXX D. Zion
Attention: XXXXXXXXXX
October 28, 1994
Dear Sirs:
Re: Retirement Counselling
We are writing in reply to your letter of August 11, 1994 in which you request confirmation of the response regarding the taxability of reimbursements for employee retirement counselling services that you received during a telephone enquiry (XXXXXXXXXX/Zion) to this directorate.
During the course of the August 3, 1994 telephone conversation, you informed us that the XXXXXXXXXX is encouraging those employees who have been offered early retirement to get counselling. The Board indicated that it would like to pay for these retirement counselling services by way of reimbursing the employees upon receipt of proof of payment. You were advised that as long as the reimbursement for the retirement counselling services is not a non-accountable allowance, that is, the employee furnishes a receipt for the services, and is reimbursed for the amount of these services, the employee will not be in receipt of a taxable benefit.
Any benefit derived from counselling services in respect of the re-employment or retirement of an employee are excluded from income of the employee by virtue of subparagraph 6(1)(a)(iv) of the Income Tax Act (the Act). This would be the case whether the employer provides the re-employment or retirement counselling services itself, pays for such services directly or reimburses the employee upon receipt of proof of payment for such services. However, an allowance intended to cover the costs of any counselling would not be excluded under subparagraph 6(1)(a)(iv) and would be included in employment income under paragraph 6(1)(b) of the Act. For your information, we have enclosed Interpretation Bulletin IT-470R Employees' Fringe Benefits and the applicable Special Release. Paragraphs 6 and 8 of the Special Release provide more detailed comments regarding the taxability of employee counselling services.
We trust our comments will be of assistance to you.
Yours truly,
P.D. Fuoco
for Director
Business and General Division
Rulings Directorate
Policy and Legislation Branch
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