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.
DEPUTY MINISTER'S OFFICE (2) ADM960702
ASSOCIATE DEPUTY MINISTER (1) DM 24197
ADM'S OFFICE (3)
RETURN TO RULINGS 15TH FLOOR, ALBION TOWER
XXXXXXXXXX
March 20, 1996
Dear XXXXXXXXXX:
I am replying to your letter of March 1, 1996, in which you asked about the tax consequences of a sales incentive program.
The confidentiality provisions of the Income Tax Act preclude the Department from discussing the tax affairs of other taxpayers. However, I can offer the following general comments relating to sales incentive programs.
If a supplier provides awards such as vacation trips as an incentive to customers who buy and sell the supplier's product, the awards are generally taxable. Such an award would normally be received by an individual in his or her capacity as an employee or a shareholder of a corporation. Where the individual received the award in his or her capacity as an employee, the amount of the award is taxable as employment income. On the other hand, where the individual received the award in his or her capacity as a shareholder, the amount of the award is taxable as a shareholder benefit. In addition, if the award is received by a self-employed individual, the amount of the award would be subject to tax as business income.
I trust that these comments will be of assistance to you.
Yours sincerely,
Pierre Gravelle, Q.C.
M. Eisner
957-2131
March 15, 1996
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