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 it fair to include a taxable benefit in income, when the cost of a Christmas party exceeds $100 per employee?
Position: Comments from Technical News Number 15 were provided.
Reasons: The Act is clear regarding benefits. However the Technical News provides some relief.
XXXXXXXXXX
Dear XXXXXXXXXX:
The Honourable Herb Dhaliwal, Minister of National Revenue, has asked me to reply to your letter concerning the taxation of employer-provided Christmas parties. A copy of your letter was sent to Mr. Dhaliwal on December 15, 1998, by the Honourable Jim Peterson, Secretary of State, Finance.
Individuals are generally subjected to tax on the value of all benefits they receive by virtue of their employment as paragraph 6(1)(a) of the Income Tax Act requires an income inclusion for the value of a benefit “of any kind whatever” received or enjoyed by a taxpayer in the year in respect of an office or employment.
However, the Department accepts as a non-taxable privilege an employer-provided party or other social event, which is generally available to all employees, if the dollar amount per employee is reasonable in the circumstances. As a guideline, the intangible benefit from those events costing up to $100 per person will be considered to be non-taxable. Ancillary costs, such as transportation home, may increase the amount considered reasonable. Accordingly, most employer-provided social events, such as Christmas parties, retirement parties and gatherings recognizing project contributions, are non-taxable privileges of employment.
For your reference, I have enclosed a copy of an Income Tax Technical Newsletter, released December 15, 1998, which includes an article on this issue.
I appreciate the opportunity to address your concerns.
Yours sincerely,
Bill McCloskey
Assistant Deputy Minister
Policy and Legislation Branch
Attachment
David Shugar
957-2133
March 9, 1999
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