1 September 2010 External T.I. 2010-0377631E5 - Employee test and licence fees.

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.

Principal Issues: Is an employer's payment or reimbursement of annual test and licence fees a taxable benefit to the employee?

Position: No.

Reasons: Consistent with the guidelines in IT-470R. The testing and licence costs are incurred as a condition of employment for the maintenance or upgrading of employment-related skills and primarily benefits the employer.

XXXXXXXXXX
									2010-037763
									T. Posadovsky, CMA
									(613) 952-8283
September 1, 2010

Dear XXXXXXXXXX :

Re: Guard test and licence fees.

We are writing in reply to your correspondence dated August 3, 2010, wherein you requested a technical interpretation regarding employee testing and licensing fees. Specifically, you wish to know whether payments or reimbursements of these fees made by the employer should be treated as a taxable benefit to the employee.

Written confirmation of the tax implications inherent in a particular transaction is given by this Directorate only where the transactions are proposed and are the subject matter of an advance income tax ruling request submitted in the manner set out in Information Circular 70-6R5, Advance Income Tax Rulings, dated May 17, 2002. As the circumstances outlined in your letter relate to completed transactions, your inquiry should be addressed to the relevant Tax Services Office. However, we are prepared to offer the following general comments.

Our Comments

Generally, an employee is taxable on the value of all benefits they receive by virtue of their employment under paragraph 6(1)(a) of the Income Tax Act (the "Act"). According to Interpretation Bulletin IT-470R (Consolidated) Employee' Fringe Benefits, when training is taken primarily for the benefit of the employer, there is no taxable benefit whether or not this training leads to a degree, diploma or certificate. However, a taxable benefit arises when the training is primarily for the benefit of the employee.

In your case, as a condition of employment, employees must undergo testing as part of a licensing process required under the Ontario Private Security and Investigative Services Act (2005). It is our view that such training is taken for the maintenance or upgrading of employment-related skills and primarily benefits the employer. Therefore, related costs paid for or reimbursed by the employer do not give rise to a taxable benefit.

For further guidelines to assist in the determination of whether a taxable benefit has been conferred on an employee under paragraph 6(1)(a) of the Act, please refer to Interpretation Bulletin IT-470R (Consolidated) Employee' Fringe Benefits on our website at http://www.cra-arc.gc.ca/E/pub/tp/it470r-consolid/it470r-consolid-e.html.

We trust our comments will be of assistance to you.

Yours truly,

Randy Hewlett
Manager
for Director
Ontario Corporate Tax Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch