1 June 2006 External T.I. 2006-0172701E5 - Educational Costs

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: (1)Whether amounts for tuition fees reimbursed by a professional development fund created under a collective agreement should be included in the taxpayer's income. (2) Whether per diem funding and moving expenses, in respect of courses taken by the union member, should be included in the taxpayer's income.

Position: (1) No. (2) No.

Reasons: (1) Employer related training is a not a taxable benefit. (2) Reasonable travel allowances and moving expenses paid in respect of employment related training are not taxable benefits.

								2006-017270
XXXXXXXXXX 							S. Lewis
(613) 941-7239
June 1, 2006

Dear XXXXXXXXXX:

Re: Educational Costs

We are writing in reply to your correspondence dated February 21, 2006, wherein you requested a technical interpretation regarding how the educational funding described below should be treated for tax purposes.

We understand the facts to be as follows:

1. XXXXXXXXXX

2. As part of the XXXXXXXXXX collective agreement, the members' employers paid a large sum of money to the XXXXXXXXXX for the profession development of its XXXXXXXXXX (the "Fund").

3. The Fund can only be used for professional development.

4. Through the Fund the XXXXXXXXXX offers to XXXXXXXXXX members initiatives such as distance education course funding, summer course funding, principal certification course funding and education leaves.

Your main concern is whether reimbursements to the XXXXXXXXXX for tuition for distance education, summer courses and principal certification; reimbursements for moving expenses related to the training; and $XXXXXXXXXX per diem funding for XXXXXXXXXX who are attending these courses away from their municipality are taxable benefits.

Our Comments

Generally, professional development or training that is taken for the maintenance or upgrading of employment-related skills will be considered to primarily benefit the employer and, therefore will not give rise to a taxable benefit under the Income Tax Act (the "Act").

In our view, no taxable benefit will arise in respect of the tuition for the courses described above since it is apparent that the courses are taken for professional development that is directly related to employment. Paragraph 18 of Interpretation Bulletin IT-470R (Consolidated) Employees' Fringe Benefits provides further guidelines that assist in the determination of whether employer-paid educational costs are to be considered a taxable benefit under paragraph 6(1)(a) of the Act. This Interpretation Bulletin can be accessed on the internet at http://www.cra-arc.gc.ca/E/pub/tp/it470r-consolid/it470r-consolid-e.html.

In addition, we are of the view that the related per diem and any reimbursement of reasonable moving expenses for employees who attend training away from home would not be taxable, pursuant to subparagraph 6(1)(b)(vii) and paragraph 6(1)(a) of the Act, respectively.

We trust our comments will be of assistance to you.

Randy Hewlett
For Director
Business and Partnerships Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch