8 December 1998 External T.I. 9827545 - EMPLOYER-PROVIDED PARKING.

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 employer-provided parking is a taxable benefit.

Position: Generally, yes.

Reasons: Our position in this regard is explicitly described in the Employer's Guide to Payroll Deductions - Taxable Benefits.

XXXXXXXXXX 5-982754
J. Gibbons

Attention: XXXXXXXXXX

December 8, 1998

Dear XXXXXXXXXX:

We are replying to your letter of October 13, 1998, in which you inquire whether employer-provided parking is taxable in a particular situation.

Although you have asked for a technical interpretation, the situation presented appears to be an actual fact situation. Accordingly, you may wish to submit all relevant facts and documentation (including company name and identification numbers) to the appropriate Tax Services Office for their comments. However, while we are unable to provide an opinion in respect of the situation outlined in your letter, we are prepared to offer the following general comments.

You describe a situation in which an employer relocates from a location at some distance from the centre of the city to a location which has greater commercial concentration and nearby parking facilities operated by third parties. The employer will continue its practice of providing free parking to its employees. You are of the view that, since the employees are not currently issued T4’s in respect of the free parking, the employees should continue to receive the employer-paid parking tax-free. Your reasoning is that the employees are not “enriched” or in receipt of an “economic advantage” since they will be in the same economic position both before and after the relocation of the office. In support of this approach, you refer to the judgment of Linden, J., in Lao v. The Queen, 97 DTC 5498.

The Department’s general position is that employer-provided parking constitutes a taxable benefit to the employee under paragraph 6(1)(a) of the Income Tax Act. As indicated on page 23 of the 97-98 “Employer’s Guide to Payroll Deductions - Taxable Benefits,” the amount of the benefit is based on the fair market value of the parking minus any payment the employee makes to use the space. The guide describes two specific exceptions. It gives the example of scramble parking where there is a shortage of parking spaces which are taken on a first-come, first-served basis. In this case, the guide indicates that no benefit need be included in an employee’s remuneration.

We disagree with your conclusion that the employees will not be enriched or be in receipt of an economic advantage. In our view, it is clear that there is a taxable employment benefit. In this regard, we suggest that it is more appropriate to compare the employees in the situation outlined in your letter to employees at the same facility whose employers do not pay for their parking and to employees of the same employer who must pay for their own parking.

In your letter, you refer to comments in opinion #9426395, which you interpret as indicating that the Department will not assess an employee benefit if there is no identifiable cost to either the employer or employee. The particular comments referred to were intended to convey the Department’s practice of not assessing a taxable benefit where the fair market value of the employer-provided parking cannot be determined. Our general position in this respect is outlined in the Department’s guide on taxable benefits, as noted above.

Further, we do not agree, as you suggest, that cases such as Lao, Phillips, etc., have any bearing on the general question of whether an amount constitutes an employee benefit. These cases specifically involve benefits received by employees to offset higher housing costs at a new location and, in our view, are only relevant to similar factual situations.

We trust that these comments will be of assistance.

Yours truly,

J.F. Oulton, CA
for Director
Business and Publications Division
Income Tax Rulings and
Interpretations Directorate

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