29 January 1993 External T.I. 9236665 F - Benefits Resulting From XXXXXXXXXX

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.

XXXXXXXXXX

Attention:  XXXXXXXXXX

Dear Sirs:

RE:  Taxable Benefits XXXXXXXXXX

We are responding to your facsimiles of December 9, 1992, and January 15, 1993 wherein you requested our views on the tax implications under paragraph 6(1)(a) of the Income Tax Act (the Act) associated with courses given by your company to prospective clients which involves counselling of their employees on the above subject. We also refer to our telephone conversation of January 15, 1993 (XXXXXXXXXX/Larochelle).

The facts regarding your enquiry are as follows:

XXXXXXXXXX

XXXXXXXXXX

Further information on the subject was provided in your facsimile of January 15, 1993 as follows:

XXXXXXXXXX

Our Comments:

As explained in our telephone conversation, we are unable to provide general comments that would apply specifically to all situations as the facts of each case may be different.

If, as indicated, certain of the courses are already in place or completed and the benefits described in your letter have already been conferred on the employees affected and you or your clients are concerned about the tax implication of these benefits, we would suggest that you provide the relevant details to the appropriate District Taxation Office for their comments and consideration. We would suggest that the person to contact in the respective office is the Chief of Verification and Collections .

In other situations which are still in the planning stage and where the a particular client is seeking your advice on the taxable position of the benefits, we would suggest that they apply for an advance income tax ruling detailing the proposed transactions and the Department will consider the tax consequences and provide a firm opinion on the matter. The procedure for requesting an advance income tax ruling is fully described in Information Circular 70-6R2 and the special release thereto. We are enclosing for your future reference a copy of these publications and we would refer you in particular to paragraph 6 thereof which states when a ruling can be provided. Notwithstanding the above comments we are however, prepared to provide you with the following general comments relating to the subject matter of your enquiry.

Generally, training which is provided by the employer, on the employer's premises during normal working hours and primarly for the employer's benefit with the employer's encouragement, and which is available to all employees who wish to participate, does not constitute a taxable benefit; a taxable benefit could arise when an employer pays for or reimburses an employee for fees paid by the employee for courses taken which are primarily for the employee's benefit. Paragraph 19 of the enclosed Interpretation Bulletin IT-470R "Employees Fringe Benefits" sets out the conditions where the benefit would not be taxable in the case of tuition fees.

A distinction should be made, however, between educational or training courses and counselling services. The benefit arising from assistance given to an employee with respect to the cost of counselling could be viewed as a taxable benefit under paragraph 6(1)(a) of the Act because this activity is not undertaken primarily for the benefit of the employer.

However, we would draw your attention to the enclosed special release to Interpretation Bulletin IT-470R and, in particular, paragraph 8 thereof which reflects the exception in subparagraph 6(1)(a)(iv) of the Act concerning a benefit derived by an employee from counselling services provided or paid for by the employer in respect of the mental or physical health of the employee.

Light refreshments such as tea, coffee, and dougnuts that are provided as part of a training course which otherwise would not be considered a taxable benefit would not, in our view, give rise to a taxable benefit in respect of such refreshments.

We trust our comments will be of assistance to you.

Yours truly,

P.D.Fuoco for DirectorBusiness and General DivisionRulings DirectorateLegislative and Intergovernmental Affairs Branch