21 September 1989 Income Tax Severed Letter ACC8709 F - Fair Market Value of Subsidized Accommodations and Utilities made Available to Certain Employees

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.

September 21, 1989

19(1)

We are writing in reply to your letter of June 26, concerning the determination of the fair market value of subsidized accommodations and utilities made available to certain employees of the your 24(1)

It is our view that the formula you propose produces a subsidized value rather than the fair market value as required under the Income Tax act.  In accordance with Interpretation Bulletin IT-470R, paragraph 6, (copy enclosed) the employer is responsible for reasonably estimating the amount of such a benefit, which would normally be considered to be the fair market rent for equivalent accommodation had the employee rented from a third party less any rent paid.  There may, however be extenuating circumstances which may allow a reduction of the market value placed on a dwelling.

Provided the table laid down by Canada Mortgage and Housing Corporation is a reasonably accurate assessment of the value of the utilities used, we would not object to its use for valuing the amount of the taxable benefit.

We trust the above will be of assistance and if you require any further information, please contact the writer.

Yours sincerely,

C. Savage A/Director Provincial and InternationalRelations Division

Enclosure

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