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: Non-cash awards included in income.
Position: Yes
Reasons: Paragraph 6(1)(a) includes value of any benefit.
XXXXXXXXXX D. Duff
990810
Dear XXXXXXXXXX:
Re: Non-cash awards to employees
This is in reply to your letters of March 25 and March 29, 1999, requesting our position on whether non-cash incentive awards must be included in an employee’s income.
You described several types of such awards and indicated that one such award was issued to participants in 1998 and a T4A was issued to these employees in respect of the award. Many of the employees have challenged this reporting and you wanted our opinion on whether it should have been reported.
In determining income from employment, paragraph 6(1)(a) of the Income Tax Act generally requires the inclusion of the value of benefits of any kind whatever received or enjoyed by the employee in the year. When an employee is rewarded by an employer with merchandise or other non-cash item, the fair market value of the award must be included in the employee's income. If an item is personalized with a corporate logo or engraved with the employee's name or a message, the fair market value of the item may be affected. In such cases, the amount to be included in the employee's income may be reduced by a reasonable amount, having regard to the circumstances (as the existence of a logo or name may have little, if any, impact on the fair market value of an item). Each situation of this nature should be considered on its own merits. There is no administrative position which provides that so long as the award has a fair market value of less than a defined dollar limit, no amount is required to be included in the employee's income. However, when the award is a plaque, trophy or other memento of nominal value for which there would be no market, a fair market value does not exist and it is not necessary to include any amount in an employee's income as a taxable benefit. The onus rests with the employer to reasonably determine when a market for a nominal item does not exist.
We trust our comments will be of assistance to you.
Roberta Albert, CA
for Director
Business and Publications Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch
All rights reserved. Permission is granted to electronically copy and to print in hard copy for internal use only. No part of this information may be reproduced, modified, transmitted or redistributed in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, or stored in a retrieval system for any purpose other than noted above (including sales), without prior written permission of Canada Revenue Agency, Ottawa, Ontario K1A 0L5
© Her Majesty the Queen in Right of Canada, 1999
Tous droits réservés. Il est permis de copier sous forme électronique ou d'imprimer pour un usage interne seulement. Toutefois, il est interdit de reproduire, de modifier, de transmettre ou de redistributer de l'information, sous quelque forme ou par quelque moyen que ce soit, de facon électronique, méchanique, photocopies ou autre, ou par stockage dans des systèmes d'extraction ou pour tout usage autre que ceux susmentionnés (incluant pour fin commerciale), sans l'autorisation écrite préalable de l'Agence du revenu du Canada, Ottawa, Ontario K1A 0L5.
© Sa Majesté la Reine du Chef du Canada, 1999
Email this Content