(b)-(l)

What is the tax treatment of amounts paid to taxpayers for using their cars in providing lifts for the organization? CRA stated (TaxInterpretations translation):

Services are rendered in the course of employment where there is an employer-employee relationship between the parties. In order to determine whether there is such a relationship, it is necessary in Quebec to take into account the principles of the Civil Code of Québec in analyzing the following three essential elements: performance of work, remuneration and a relationship of subordination between the parties. ...

In situations similar to the particular situation, where the services are not performed in the course of an employment or business, we are of the view that the amounts received do not have to be included in the computation of income of the taxpayer.

CRA confirmed its view in 2014-0552731E5 that employees, who were required to use cell phones in the performance of their duties, received a taxable allowance when their employer paid them a fixed monthly amount (calibrated to each employee's duties) not in excess of their costs, given that the employer “did not require detailed receipts.”

Employees, who are required to use cell phones in the performance of their duties and to have their cell phone contracts approved by the employer, but bear the monthly costs of the contracts personally. However, the employer pays each a fixed amount based on the particular requirements of each employee not in excess of their costs. The employees do not systematically provide copies of their invoices, but are required to retain them for possible future inspection. CRA stated (TaxInterpretations translation):

Given that you do not require detailed receipts…the monthly payments to your employees for using their personal cell phones required in the performance of their employment do not constitute a reimbursement of expenses. …[T]he monthly payment constitutes an allowance. Consequently, the monthly payment must be included in computing the income of the employee… .

Mr. X who was employed abroad by Company Y, is relocated to work for Company X (an associated Canadian corporation) at a Canadian location. Company X wishes to provide him with relocation compensation that Mr. X could use to acquire new furniture and new supplies. The expenses associated with the relocation of the household articles of Mr. X would be greater than the amount of the compensation amount that would be paid to him. The compensation amount would have a fixed amount and would only be paid on presentation of supporting invoices by Mr X. Would this amount be taxable? CRA stated:

While generally a relocation allowance for which the recipient does not have to justify the use is taxable, [CRA] has an administrative position with respect to relocation allowances of an employee…. This CRA administrative position does not apply to expenses related to the purchase of new goods (such as furnishings, carpets, bedding and household items) or to improvements and repairs of household articles.

The only compensation received by taxpayers from a non-profit organization for transporting, using their own automobiles, people with reduced mobility so that they can make health-care appointments, is $0.42 per kilometer traveled. Is this taxable? CRA responded:

In situations similar to the given situation, where the services are not rendered in the course of an employment or business, we are of the view that the amounts received do not have to be included in the computation of income of the taxpayer.

Monthly allowances received by a former employee of a US charitable trust is not income to him given that they are "financial assistance is based on the individual's personal financial needs" so that "the amounts received from the Fund are likely received in the individual's personal capacity rather than by virtue of the individual's employment." However, "since the criteria of paragraph 56(1)(u) appear to have been met, the financial assistance should be included in the individual's net income under that paragraph and deducted under paragraph 110(1)(f)."

Where an existing stock option plan is amended by permitting employees to request cash payment for the value of their stock options, s. 7(1)(b) will not apply where an employee requests cash payment and the employer chooses to settle this obligation by issuing shares having a fair market value equal to the economic value of the option.

Following the decision in The Queen v. Huffman, 90 DTC 6405 (FCA), it is the Department's position "that a reasonable allowance in respect of dry cleaning and uniform maintenance would not constitute a taxable benefit to the extent that it is actually expended for that purpose."

Although a non-accountable allowance for uniform dry cleaning and maintenance would not constitute a taxable benefit to the employee provided the allowance was reasonable and actually expended, a non-accountable personal grooming allowance would constitute a taxable benefit.

"An employee would not be considered to be in receipt of a taxable benefit with respect to special or protective clothing (including safety footwear) which, by reason of the hazards inherent in the employment duties or by a law of a province or Canada, the employee is required to wear, where the employer provides the employee with a clothing allowance to the extent the allowance is expended on such special or protective clothing."

A relocation allowance equal to 1/12 or 1/24 of one year's salary of a member of the RCMP will be taxable as remuneration from employment in light of McLay v. MNR, 92 DTC 2261 (TCC).

RC generally accepts that a non-accountable allowance for overtime supper money that is less than or equal to the value or cost of a normal meal, where payment of the allowance is not governed by a collective agreement and the requirement to work overtime does not occur frequently, is a reimbursement on account of the cost of the meal and, therefore, it is not subject to tax in the employee's hands.

Amounts received by employees pursuant to a Quebec regulation requiring construction contractors to pay a set amount per day to employees to cover the employees' cost of travelling between home and the work site are included in their income under s. 5(1), and are not allowances for travelling expenses within the meaning of s. 6(1)(b).

An allowance paid to employees paid by reference to their increased commuting distance resulting from an employer's relocation would be included in their income.

Where the employers' practice was to provide a periodical lump sum payment for trips within a 16-kilometre radius from the employer's place of business, and to provide a reasonable allowance based on the distance travelled for trips outside this radius, the full amount of lump sum payment received with respect to travelling within the 16-kilometre radius was taxable under s. 6(1)(b).

Per diem judges and per diem justices of the peace, who are former full-time judges and former full-time or part-time justices of the peace, are paid a fixed rate per day of work, and are not provided with an office space, office supplies or secretarial/administrative assistance. In finding that such receipts are taxable under s. 6(1)(c), CRA stated that the:

case law on the subject...specifies that a legal entitlement to a per diem rate of remuneration established in advance is sufficiently "fixed or ascertainable" to meet the definition of an "office".

Where a non-profit corporation holds an annual conference each year in a selected Canadian city and asks each of its directors to attend the conference free of charge, the waived conference fee will not be considered to be in the nature of a director's fee if the main purpose in requesting the directors' attendance was to further the aims and objectives of the corporation.

Respecting where an electric vehicle used for business purposes or in the course of employment is charged at home and there is no electricity meter specific to the vehicle, CRA referenced use of the per-kilometre electricity standard provided by the manufacturer in determining the annual electricity cost, stating:

[T]he establishment of an average per-kilometer energy cost could be a reasonable method. In such a situation, the taxpayer would also need to take into account the use of pay-charging stations or free charging stations in establishing those costs.

In discussing whether there is a taxable benefit to the driver of an executive's employer-provided automobile, CRA noted that it was its long-standing position "that travel between employees’ homes and their regular place of employment (RPE) is personal travel," and then commented:

Where a driver picks up and drops off an executive at his or her residence on a regular basis, it is the CRA’s view that the executive’s residence is a RPE for the driver. Travel between the driver’s home and the executive’s residence would therefore be personal travel for the driver....However, if the driver only occasionally drives the executive to his or her residence, then the executive’s residence will not be a RPE for the driver providing there are various times and locations for the daily pick-up and drop-off of the executive.

CRA noted that an employer's group disability plan which was administered by an administrator (such as an insurance corporation) on an administrativee services only basis nonetheless would qualify as an insurance plan ("IP") (and a wage loss replacement plan ("WLRP")) for the purpose of paragraph 6(1)(f) of the Act, if it contained "an undertaking by one person to indemnify another person, for an agreed consideration, from a loss or liability in respect of an event, the happening of which is uncertain." When asked whether the "decision in Tsiaprailis, 2005 DTC 5119, would apply to characterize a payment made by the administrator to an employee in settlement of future periodic benefits under the disability plan as a capital receipt from the disposition of a right," CRA stated:

…where it is established that the ASO plan is an IP and therefore a WLRP, the decision of the SCC in Tsiaprailis would apply to characterize the amount of a settlement for future WLRP benefits as a capital receipt from the disposition of a right….

Subparagraph 39(1)(a)(iii)...would exclude the capital receipt from the disposition of an employee's right under an ASO plan, if the plan was an IP, from the employee's income.

However where an employee receives such a settlement amount under an employer's ASO plan that is not an IP, the amount would be included in the employee's income under subsection 5(1) or section 6….

It is contemplated that a lump sum would be paid to the individual plaintiffs in a class action suit in settlement of their allegation that monthly long-term disability benefits received by them should not have been reduced by monthly benefits under the Pension Act. Applying the surrogatum principle in Tsiaprailis, CRA found that this amount would be taxable and included in the recipient's employment income in the year received under s. 6(1)(f), although it would qualify for relief under s. 110.2(2).

Where an employee-pay-all disability plan becomes a plan in which the employer makes 100% of the contributions, an employee in receipt of benefits at the time the plan is converted may continue to receive non-taxable benefits in such amount and for such length of time as may have been specified in the plan when benefits commenced. If an employee's benefits commence after the conversion, the benefits will be included in income under s. 6(1)(f) and, given that such conversion results in a new plan, contributions made by the employee to the prior plan cannot be deducted from benefits received from the new plan.

For a disability insurance plan to be an employee-pay-all plan, the employees must be legally responsible for paying all the premiums, notwithstanding that the employer may withhold the premiums from the employees' wages and remit them on behalf of the employees.

The existence of an employee-paid-all plan is not determined by looking at the manner in which payments are made or reported, but rather is determined by ascertaining who is contractually obligated to pay the premiums. If the legal obligation for paying the disability plan premiums is split 50-50 between the employer and the employee, an employee would be subject to tax on any benefits received under the plan under s. 6(1)(f) to the extent that they exceed the deduction under s. 6(1)(f)(v) in respect of employee contributions.

An employee pay-all plan can be considered to exist separate from a plan to which the employer contributes even if the plans are co-ordinated to ensure that disability income does not exceed a stipulated percentage of pre-disability income.

Where the employer makes all contributions to one long term disability plan and it is intended that the employees will make all the contributions to a second long term disability plan, the fact that the premium in the first year will be identical for a member of either plan would not, by itself, result in the existence of two plans. However, if in light of all the circumstances, the employer premiums paid to the insurance company in respect of the first plan should have been lower than the premiums for the second plan, the excess premiums paid by the employer would be regarded as a contribution made by the employer to the second plan.

Amounts received in settlement of an action relating to an entitlement to long-term disability benefits were viewed as being a settlement of the taxpayer's right to sue for damages and, accordingly, were not required to be included in income.

Where an individual with a degenerative disorder begins to receive L.T.D. benefits subsequent to the conversion of an employee-pay-all Ltd plan to a second plan under which the employer makes all contributions, the benefits likely will be taxable under s. 6(1)(f).

"The issue of whether or not an employee-pay-all plan exists is not determined by considering who paid the related premiums. Rather, the question of whether an employee-pay-all plan exists depends upon whether the plan itself places upon the employees the legal obligation to pay 100% of the premiums ... Of course, where the employer can be regarded as having paid a part of an employee's Ltd premium that the employee is legally obligated to pay, that part must be treated in the manner of salary or wages received by the employee."

Discussion of treatment of payments from the plan after the employer rather than the employees becomes required to make all contributions to the plan.

Benefits which arise subsequent to the conversion of a taxable plan to a non-taxable plan are included in income unless those benefits are in no way conditional on participation in the old plan.

Discussion of a disability plan which includes a provision whereby the normal employee contributions to a registered pension plan will be funded by the disability plan in the event of disability.

Discussion of various issues arising where an employer provides both taxable and non-taxable disability benefits to employees.

Where an employee is obliged to pay deficiencies under a wage loss replacement plan funded by employee premiums and is entitled to plan surpluses, any payments made by the employer to the plan, voluntary or otherwise, will constitute employer contributions, with the result that benefits received by the employees are taxable.

If the employer pays administration expenses, claim handling charges, legal expenses, actuarial fees or any other charges required in the establishment, operation, or winding-up of a group long term disability plan, then that plan will not qualify as an employee-pay-all plan for purposes of IT-428, para. 16.

Any amounts paid by an employee to a third party not related to the employer for the operating expenses of an employer-provided automobile will not reduce the operating expense benefit.

"The Department's long standing position that travel between the home and workplace is personal in nature is not altered by the fact that an employer may require an employee to perform an employment-related function (such as an area patrol or a delivery or pick-up) during the course of the trip between the home and workplace. Where the primary purpose of a particular trip is personal in nature, then it is treated as such for tax purposes regardless of any employment activity which may take place during the course of that trip."