19 August 1996 External T.I. 9610475 - EMPLOYEE REIMBURSEMENT ON MOVING-COST OF HOME

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:

reimbursement of actual loss on disposition of home by employee upon job-related relocation -does cost of home include capital renovations

Position:

yes but not repairs or maintenance

Reasons:

In past corres E9418715, we stated that cost was the purchase price. While ordinary repairs and maintenance do not increase the cost of a house, including re-painting, replacement of roof, furnace, etc. capital additions that significantly alter the value of the house would normally be capitalized and increase the ACB of the property

A. Humenuk
XXXXXXXXXX							961047

Attention: XXXXXXXXXX

August 19, 1996

Dear XXXXXXXXXX:

Re: Reimbursement of an Employee's Moving Expenses

We are replying to your letter of March 18, and April 4, 1996, in which you ask whether paragraph 37 of Interpretation Bulletin IT-470R, Employees' Fringe Benefits, still represents the Department's view with respect to the taxation of certain payments made to an employee when the employee has moved to another location at the request of the employer or at the termination of employment in a remote area.

The position set out in paragraph 37 of IT-470R continues to reflect the Department's position with respect to the reimbursement of an actual loss incurred by the employee in respect of the disposition of the employee's home as determined with reference to the cost of the home. An actual loss is incurred when the proceeds from the disposition of the residence is less than its cost. For this purpose, the cost of a home includes the purchase price and the amount paid for any capital improvements but does not include regular repair and maintenance costs.

We trust our comments will be of assistance to you.

Yours truly,

Jack A. Szeszycki
for Director
Business and Publications Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch