11 July 1991 Ministerial Letter 911618 F - Board and lodging as taxable benefits and other issues

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.

We are writing in reply to your letter of June 7. 1991, wherein you requested our views with respect to certain income tax issues related to 24(1). Our understanding of the situation set out in your letter is as follows.

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Our Comments

We will respond to the questions posed in your letter in the order in which they appear.

Value of board, lodging and incidentals as employment income

It is our opinion that the value of the board, lodging and other incidentals would be included in the 24(1) income from an office or employment by virtue of paragraph 6(1)(a) of the Income Tax Act (the Act). We are unable to agree with your rationale for the exclusion of these benefits from the 24(1) income. The board and lodging etc., would, in our view, be considered to be a "perquisite of the employment" similar to the situations discussed in paragraph 4 of IT-470R.

Deduction of earned income under subsection 110(2) of the Act

Although it would appear that, technically, no amount could be deducted under subsection 110(2) of the Act because of the taxable benefit computed under paragraph 6(l)(a) of the Act, for administrative purposes the Department will permit the deduction of both the employment income paid to the 24(1) plus the value of the taxable benefit under subsection 110(2) of the Act.  This opinion is based on the assumption that all of the requirements of subsection  110(2) of the Act are met in each and every instance where such a claim is being made.

Application of sections 122.4 and 122.5 of the Act

Since the amounts computed under subsection 110(2) of the Act are deductible in computing taxable income and not net income, for purposes of computing the Federal tax credit and the goods and services tax credit, net income would be the aggregate of the 24(1), employment incomes and the taxable benefits in the above scenario.

We trust our comments will be of assistance to you.

Yours truly,

for DirectorBusiness and General DivisionRulings DirectorateLegislative and Intergovernmental     Affairs Branch

c.c.     D. Dimillo     Assessing and Enquiries Division     Returns Processing Division