25 February 1993 Income Tax Severed Letter 9231835 - Tax Refunds to Employees of International Financial Centres

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.

923183
XXXXXXXXXX A. Humenuk
(613) 957-2134

Attention: XXXXXXXXXX

February 25, 1993

Dear XXXXXXXXXX

Re: International Financial Business (Tax Refund) Act
of British Columbia

We are replying to your letter of October 23, 1992 concerning the issue of whether a taxable benefit arises when certain employees of "registered financial institutions" receive a refund of provincial income tax under the International Financial Business (Tax Refund) Act of British Columbia (the Tax Refund Act).

As requested, we have reconsidered our previously stated position that such a refund constitutes a taxable benefit to the employees who receive them. Your position is based on the premise that the tax refunds do not constitute a benefit to the employees and thus are not required to be included in income by virtue of paragraph 6(1)(a) of the Income Tax Act. You cite various court cases to support the premise that the reimbursement of an expense cannot be considered to be a benefit to an employee.

While we agree that the reimbursement of an expense incurred in the performance of the duties of employment is not a benefit to the employee so reimbursed, it is our view that the reimbursement of a personal expense of an employee is a taxable benefit except in the limited circumstances described in the various court cases so cited. The payment of income tax is personal expense.

On the other hand, it may be that the Tax Refund Act does not provide for a reimbursement of an expense but rather alters the amount of tax otherwise payable by an individual under the Income Tax Act of British Columbia. On that basis, we can agree that a refund to an individual employee under the Tax Refund Act is not an amount required to be included in the employee's income for the purposes of the Income Tax Act.

We trust you will find this explanation satisfactory.

Yours truly,

P.D. Fuoco
for Director
Business and General Division
Rulings Directorate
Legislative and Intergovernmental
Affairs Branch