22 November 1995 Internal T.I. 9526637 - reimbursement for above ground pool

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 reimbursement for loss suffered on relocation results in a taxable benefit. Employee was compensated for loss on abandonment of a 24 ft. above ground swimming pool

Position:

results in benefit under 6(1)(a)

Reasons:

payment/reimbursement for losses incurred on a relocation re. abandonment of fixtures or perishable goods which cannot be moved or the moving costs would exceed their value results in a taxable benefit to the employee

		November 22, 1995

	Saint John Tax Services	HEADQUARTERS
	Client Assistance Division			Sandra Short
(613) 957-8953
	Attention:  Louise A. McShane
	            Problem Resolution Officer

		952663

Employer reimbursement for above ground pool

This is in reply to your correspondence dated October 3, 1995 concerning the taxability of an amount received by an employee from his employer as a result of a relocation (XXXXXXXXXX).

XXXXXXXXXX

The amount of $XXXXXXXXXX was reimbursed to the employee as compensation for the loss incurred on the abandonment of a 24 ft. above ground swimming pool. A T4A was issued in the same amount. The employee has written you requesting that this amount be removed from his income. He believes that the reimbursement of $XXXXXXXXXX from his employer is either a capital gain which is eligible for the capital gains deduction or not taxable as it was in respect of the sale of his principal residence.

It is our opinion that the amount received by the client is taxable under paragraph 6(1)(a) of the Act as a benefit received by him in respect of, in the course of, or by virtue of his office or employment. It is our view that the payment or reimbursement by an employer to an employee for losses incurred on a relocation in respect of the abandonment of fixtures or perishable goods which cannot be moved or the moving costs would exceed their value including above ground swimming pools, barbecues, t.v. antennas, fixed carpets, blinds or window shades, frozen foods, plants, firewood or perishables such as paint, etc. results in a taxable benefit to the employee.

The transaction between the employee and his employer is neither a sale transaction nor a disposition of property. The employee has simply been reimbursed (for the full cost of the pool) because he suffered a capital loss upon the sale of his pool to another party. The loss incurred as a result of the sale to the third party is not deductible to the client as a capital loss from the disposition of a personal-use property in any circumstances.

Further, we do not agree with the argument that the reimbursement should not be taxable because it is in respect of the sale of a principal residence. Paragraph 37 of Interpretation Bulletin IT-470R states that if an employer reimburses an employee for a loss suffered by the latter in selling the family home upon being required by the employer to move to another locality ... the amount so reimbursed is not income of the employee if it is not greater than the actual loss calculated as the amount by which the cost of the home to the employee exceeds the net selling price received for it. The cost of the pool, which in this case mirrors exactly the amount which the client was reimbursed, is not considered a cost of the principal residence as these are two separate and distinct assets even if they may have been sold for one combined price. The employer is clear in stating the purpose of the reimbursement and it in no way indicates that it is a reimbursement to the employee for a loss suffered in the sale of the principal residence. The amount reimbursed is to specifically compensate the employee for a particular loss suffered during the course of a relocation, that is, for the loss incurred on the abandonment of the above ground pool.

P.D. Fuoco
Section Chief
Personal and General Section
Business and General Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch