Paragraph 6(1)(a)

Commentary

Subject to the listed exceptions in ss. 6(1)(a)(i) to (v), s. 6(1)(a) requires the inclusion in a taxpayer's income for a taxation year from an office or employment of the value of board, lodging "and any other benefits of any kind whatever" that are received or enjoyed by the taxpayer in the year in respect of, in the course of, or by virtue of an office or employment.

Determination of "benefit"

The numerous cases considering whether a taxpayer has received or enjoyed a "benefit" for purposes of s. 6(1)(a) turn in large part on the facts of each case. Nonetheless, a number of principles (or, at least, tendencies) may be present.

The Federal Court of Appeal has stated that "to be taxable as a benefit, a receipt must confer an economic advantage on the employee," (Schroter, following Hoefele), and that if an employee receives an economic advantage, but the primary benefit of that receipt is the employer, no benefit arises under paragraph 6(1)(a) (Schroter, following Lowe). Accordingly, an expense which is incurred by an employer primarily for its benefit likely is not a benefit to the employee (Dhillon), perhaps even in circumstances where this gives rise to a material acquisition of something of value to the employee (Rachfalowski). Conversely, the reimbursement by the employer of a loss or expense incurred by the employee primarily for the benefit of the employer likely does not give rise to a benefit to the employee (Lowe). For example, subsidizing the additional mortgage expense incurred by the employee as a result of relocation at the employer's request to a pricier city or at a time of increased mortgage interest rates may not give rise to a benefit (Hoefele, Splane, Douglas, Zaugg, cf. Pezzelato, see also McNeill). In one case, the provision of an interest-free loan in connection with an employee relocation also did not give rise to a benefit (Siwik). Other examples are reimbursement for the costs of non-civilian clothing (Huffman), the provision of a pickup truck that is used for the performance of duties of employment rather than commuting to work (Anderson), the receipt of lodging and meals in the course of an intensive training program (Dhillon) or the reimbursement of additional meal expenses incurred as a result of working overtime (Confederation des Caisses Populaires). Reimbursing (or paying for) legal expenses of the employee (including defence costs in a prosecution) should not give rise to a taxable benefit if there is a sufficiently close nexus between the conduct that gave rise to the litigation and the performance by the employee of duties of employment (Clemiss, Savard, Bilodeau, see also Pellizari). The provisions of free parking typically will not give rise to a taxable benefit where the employee is required to use his or her car in travelling between the office and other work locations, or between such locations and the offices of customers or potential customers (Adler, Chow, Saskatchewan Telecommunications, Anthony, Johannsson). Where the employer pays for a parking pass for the employee in circumstances where other employees must pay for parking, there will be a taxable benefit based on the price of the parking pass unless perhaps it is established that the economic benefits to the employer from providing the parking substantially exceed the monetary value of the parking pass (Shroter). Depending on the facts, such a finding of no benefit may or may not arise where the employee takes a trip to a resort or the like for promotional purposes of the employer or a business partner of the employer (Lowe, Philp, Hart, see also Stevens).

The above principles excluding a finding of a benefit for purposes of s. 6(1)(a) may not be satisfied if any resulting benefit to the employee is significant rather than incidental (McGoldrick), for example, where the employee as a result of an employer-requested relocation is assisted in acquiring a home having a greater market value, albeit perhaps of lower quality (Derosiers, Lao, Phillips), where a minimum resale price for an employee home is guaranteed (or the right of the employee to this guarantee is bought out - Blanchard), where an employer-subsidized course results in the employee obtaining a professional designation (Jex), or where the employee receives free hotel accommodation after the Christmas party (Dunlap). Similarly, the reimbursement of additional expenses of a largely personal nature incurred as a result of an employer-requested relocation generally will give rise to a taxable benefit (Guay, Dionne, Suffolk). There also will be a taxable benefit where the employee is compensated for the lack of availability of a tax benefit such as the overseas employment tax credit (Killinger) or for the higher tax rate on Canadian-source employment income (Gernhart).

Bowman J. (as he then was) suggested that the phrase "of any kind whatever" was not intended to add to the meaning of what constitutes a benefit but rather to prevent the meaning of the word from being restricted by interpreting it ejusdem generis with board and lodging (Pezzelato).

Meaning of "enjoy" and "board"

Bowman C.J. stated that "enjoy" means to "have the use of or benefit of" (Rachfalowski).

It was found in a British context that the provision of a continental breakfast was "board" (Otter v. Norman).

Timing of recognition of benefit

A benefit is received when there is a transfer of valuable property to the employee. Accordingly, the Henley case found that the time at which an employee received any benefit from the issuance to him by a client of his employer of a warrant to acquire shares of the client was the time of issuance of the warrant, so that a subsequent exercise of the warrant represented a mere exercise of existing contractual rights rather than the receipt of a further benefit in the course of his employment (see also Abbott v. Philbin). The earlier decision in Robertson (followed in Markin) was distinguished on the basis that where an employee receives a right to acquire property only upon the fulfillment of a significant condition, the benefit will not be received until that condition is satisfied. (In the Robertson case, options to acquire shares of a third party did not vest until the employee had worked for specified periods of time.)

Similarly, in Hogg amounts were considered to be received at the time of their vesting rather than when they subsequently were actually pocketed by the employee at the time of his retirement.

Determination of what is "in respect of, in the course of, or by virtue of...employment"

As the concept of "benefits...in respect of...employment" is broad, s. 6(1)(a) is not restricted to payments that partake of the character of remuneration for services (Savage, effectively overruling Phaneuf, see also Cooke).

Benefits received by an employee in recognition of work performed (or otherwise in respect of his or her employment) will be taxable benefits even where they are provided by a third party, e.g., the provision of a free trip to a sunny locale as a reward (see Phillips), or the provision and then forgiveness of a loan by his employer's customer (Norris). Thus, compensation received by police officers from third parties for performing security services outside their regular hours of employment nonetheless may be taxable benefits if their employer is closely involved in the allocation and coordination of these additional assignments (Baptist, cf. Gordon). Amounts received by an employee for consultation services provided by him following the cessation of his regular duties of employment also may be taxable benefits (Heggie). Kickbacks received, for example, by a corrupt purchasing agent will be taxable benefits even though the employer presumably has no knowledge of these receipts (Robson, Poynton, see also Goldman).

"Allowances" received by a prospective employee from the employer while being trained for the position generally will be taxable under s. 6(1)(a) or s. 6(1)(b) (Dhillon).

The House of Lords has stated that "'In the course of employment' does not mean during the currency of the engagement, but means in the course of the work which the workman is employed to do and what is incident to it." (Armstrong v. Redford.)

The phrase "in respect of, in the course of, or by virtue of...employment" has also been considered in the context of s. 7(5).

Valuation of benefit

Although some earlier cases focused on the cost of providing a benefit to the employer (e.g., Stevens), it is now established that a benefit from employment is generally to be valued at its fair market value where this is determinable (Spence, applying Schroter). Fair market value will often be determinable (through direct comparison to similar goods or services) even if the specific benefit is not available on the open market (Anthony).

A substantial discount may be applied to take into account limitations associated with what the employee is actually receiving, e.g., the degree of disturbance and lack of privacy associated with accommodation provided at a boarding school (Schutz). The benefit from free business class seats received under a frequent flyer program as a result of travel in the course of employment was valued by multiplying the ratio of the price of the most heavily-discounted economy class fare to the price of a full fare economy class ticket by the full retail price of a business class seat (Mommersteeg).

Even in the absence of s. 6(15), an employee generally would be considered to receive a benefit from employment, when an amount owing to his or her employer is forgiven, equal to the amount of the forgiveness (McIlhirgey, Bolton, Norris).

Cases

Anthony v. The Queen, 2010 DTC 1356 [at 4392], 2010 TCC 533 (Informal Procedure), aff'd 2012 DTC 5019 [at 6633], 2011 FCA 336

Free parking for school employees was found to be a taxable benefit which should be valued at fair market value. The Minister's and taxpayers' valuations both used the direct comparison approach, which determines value by checking prices for similar products or services. Paris J. rejected comparisons to parking lots that were far away from the school, and ones that were close to busy streets. Of all parking places that experts compared, the only reasonable ones were in two nearby apartment buildings. Paris J. took the average of their prices, less 10%, to be the fair market value of the benefits; experts for both sides agreed that, being outdoors, the school parking was worth 10% less than otherwise comparable indoor parking.

On appeal, the Court rejected the taxpayer's further submission that fair market value is an appropriate basis for valuation only where there is an open market for the benefit in issue (para. 6).

Locations of other summaries Wordcount
Tax Topics - General Concepts - Fair Market Value - Other 117

Canada v. Spence, 2011 DTC 5111 [at 5937], 2011 FCA 200

The taxpayers enrolled their children at the Montessori school where they taught, and were charged tuition at a 50% discount to that charged to the other parents. The trial judge found that the resulting taxable benefit should be valued at the costs incurred by the school in connection with the taxpayers' children minus the tuition paid. The Court of Appeal agreed with the Minister that the appropriate valuation method, as per Schroter, should be based on the fair market value of the service, so that the taxable benefits were equal to the difference between the regular tuition and the discounted tuition charged to the taxpayers.

Schroter v. Canada, 2010 DTC 5062, 2010 FCA 98

The taxpayer had received a taxable benefit upon being given a parking pass by his employer. Dawson JA found that the trial judge had taken into account the principle in Hoefele that "to be taxable as a benefit, a receipt must confer an economic advantage on the employee" and the principle in Lowe that "if an employee receives an economic advantage, but the primary beneficiary of that receipt is the employer, no benefit arises under paragraph 6(1)(a)." In particular, the taxpayer received an economic benefit because, unlike other employees at the office, he did not have to pay for parking, and the trial judge had not made a palpable error in finding that the taxpayer had failed to establish that the employer was the primary beneficiary of the employee's parking pass.

As for the value of the benefit received, "the equal treatment of taxpayers is facilitated by valuing their benefits at their fair market value" (para. 47). Here, the value of the benefit received was the retail price for a parking pass at the parking facility.

Canada (Attorney General) v. Henley, 2008 DTC 6017, 2007 FCA 370

The taxpayer, who was an employee of an investment dealer ("Canaccord"), received a portion of the warrants that were issued by a client of Canaccord to Canaccord upon the successful completion of an equity offering by the client. In finding that the taxpayer received a benefit from employment in the year in which the warrants were transferred to him rather than in the subsequent year (following substantial appreciation in the value of the shares of the client) when he exercised those warrants, Ryer J.A. stated (at para. 21):

"To summarize, Robertson may be considered to stand for the proposition that where, in the course of an employment relationship, an employee receives a right to acquire property from his or her employer upon the fulfilment of a condition or contingency, the receipt of that right will not constitute a paragraph 6(1)(a) benefit to the employee and such a benefit will not arise until the condition or contingency has been fulfilled."

Here, as the taxpayer had done all that was required of him in the year in which the warrants were transferred to him, the receipt of the paragraph 6(1)(a) benefit was not deferred until the time of exercise.

Guay v. Canada (Attorney General), 2006 DTC 6391, 2005 FCA 97

The reimbursement by the employer of the taxpayer of expenses incurred by him in sending his children to a lycée francais in the Dominican Republic was a taxable benefit given that the reimbursement of the tuition did not fit within the exceptional case where the expense was imposed by the very nature of his employment.

McGoldrick v. Canada, 2004 DTC 6407, 2004 FCA 189

personal benefit of free meals was more than incidental/not primary employer benefit
see also, 2006 DTC 2045, 2005 TCC 735 (Informal Procedure)

The operator of the casino at which the taxpayer worked (at which there was no food that could be purchased by employees other than in vending machines) prohibited food from being brought on to the premises for sanitation reasons and provided one free meal per shift at a cafeteria. The Court found that the Tax Court Judge had not made any palpable and overriding error in finding that although the meals were provided for a business purpose, the personal benefit to the taxpayer could not be said to be incidental.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 180 - Subsection 180(3) Housen v. Nikolaisen standard 60

Dhillon v. The Queen, 2002 DTC 2083 (TCC)

The taxpayer was found to be an employee of the RCMP during a 27-week instruction program at a "training academy" given that she had approximately four hours per week of work duties (e.g., front desk reception and guard duty), that most trainees, including her, became full-time constables following completion of the program and the "master servant" relationship that existed in the training program.

Out of a total allowance of $9,520, the RCMP deducted $2,482 for meals, $971 for lodging and $320 for various insurance coverage items. These deductions did not represent an allowance under s. 6(1)(b) because she had no discretion over their use, and they did not represent a benefit under s. 6(1)(a) since these expenses were incurred in the course of employment and were of virtually no benefit to her (in light of the rigorous conditions at the Academy) and instead were incurred by the RCMP for its own account and for its own benefit. Hershfield T.C.J. stated (at p. 2092) that:

"The taxability under paragraph 6(1)(a) of any benefit conferred is not the amount the employer determines as pay foregone but the value of the benefit as determined in accordance with principles applicable for the purposes of that paragraph."

and that:

"To include any value in income it must first be determined to be a benefit that benefits the employee as opposed to being primarily for the benefit of the employer."

Buccini v. Canada, 2000 DTC 6685 (FCA)

Following the amalgamation of the taxpayer's employer with other Canadian subsidiaries of the U.S. parent, the taxpayer executed a settlement agreement with the employer in which he acknowledged that a payment of $83,900 was in full settlement of all claims arising from his employer's unilateral termination of the employee stock option agreement between the taxpayer and the employer. In finding that the sum was not taxable under s. 6(1), Malone J.A. noted (at p. 6689) that it was "well-settled law that damages for breach of a contract of employment are not taxable under section 6".

Bernier v. Canada, 2000 DTC 6053 (FCA)

A lump sum was paid to the taxpayer as compensation for the unilateral termination by her employer of a stock option plan and not for an assignment of rights under the stock option plan. Given that the source of the payment was not a stock option contract but, rather, its unilateral repudiation, the amount received by the taxpayer did not fall under s. 7(1)(b), and was a taxable benefit under s. 6(1)(a).

Dionne v. The Queen, 99 DTC 5282 (FCA)

The amount received by an employee residing in the North as reimbursement for the costs of transporting food that could not be purchased locally represented a taxable benefit.

Desrosiers v. Canada, 99 DTC 5279 (FCA)

In finding that the taxpayer, who moved from a job in Aylmer, Quebec to Toronto, received a taxable benefit when his new employer paid to him the difference between the cost to him of a clearly inferior home in Oakville and the value of his previous home, Noël J.A. stated (at p. 5281):

"The Revenue Department is not concerned with the use, whether good or bad, that the applicant may have made of the financial assistance he received. What matters is the existence of a benefit which is quantifiable in monetary terms."

R. v. Robson, 98 DTC 6452 (Ont CA)

In finding that kickbacks paid to an employee by subcontractors doing business with the employee's employer were taxable employment income for purposes of ss.5 and 6 of the Act, the Court noted (at p. 6453):

"If a taxpayer receives a benefit because of his or her employment then it must be said that the benefit was received in respect of or by virtue of the employment. This is so whether the benefit comes from the employer or a third party."

Canada v. Lao, 97 DTC 5498 (FCA)

The taxpayer, who was relocated from Edmonton to Toronto by his employer, was taxable on $22,500 that he received from his employer to help compensate him for the higher housing prices in the Toronto area. His net worth had been increased by this payment and, accordingly, he had been "enriched" rather than "restored".

Markin v. The Queen, 96 DTC 6483 (FCTD)

The taxpayer's employer granted him and other employees a contractual right to receive an undivided 0.5% of the net profits attributable to the interest of the employer in oil and gas properties. The taxpayer had the right upon the termination of his employment to surrender his net profits interest in consideration for a cash payment. The lump sum of $389,760 received by the taxpayer for such surrender of his interest on his termination of employment was found to be a benefit of his employment given that he had acquired his net profits interest by virtue of his employment.

On the basis of the Robertson decision, infra, this benefit was taxable in the year of receipt.

Lowe v. The Queen, 96 DTC 6226 (FCA)

The taxpayer, who was an account executive with an insurance company and was responsible for maintaining and developing relationships with independent insurance brokers, did not receive an employment benefit when his employer paid the cost of him and his wife attending a four-day trip to New Orleans in which they spent most of their time ensuring that the brokers had a good time. Any benefit received by him "was a mere incident of what was primarily a business trip" (p. 6230). In the case of his wife, although she was under no obligation to be present, it nonetheless was clear that her presence was at the request of the employer and was primarily to serve the employer's business.

Attorney General of Canada v. Hoefele, 95 DTC 5602 (FCA)

After a national real estate company advised that a Toronto home cost 155% of a similar home in Calgary, Petro-Canada agreed to pay a time-limited interest subsidy to employees that it required to relocate from Calgary to Toronto based on the increase (up to 55%) in the principal of their house mortgages.

Before going on to find that such subsidies were not a "benefit" because there was no resulting increase in the employees' equity in their homes, Linden J.A. stated (at p. 5604) that "a receipt which does not increase net worth is not a benefit and is not taxable".

Locations of other summaries Wordcount
Tax Topics - General Concepts - Tax Avoidance form matters 76
Tax Topics - Income Tax Act - Section 80.4 - Subsection 80.4(1) new mortgage debt of relocated employees 121

The Queen v. Blanchard, 95 DTC 5479 (FCA)

As part of an offer of a position at the Fort McMurry processing plant of Syncrude Canada Ltd., the taxpayer was given the option of participating in a housing program which, among other things, provided that upon the cessation of his employment with Syncrude Canada, he would be guaranteed a market for the sale of his Fort McMurray home at no commission and at a price not to be less than a stipulated minimum price. An amount subsequently received by the taxpayer in consideration for his agreement to end his participation in this housing program was found to be a benefit from employment given that the housing program was offered as an incentive for relocation to the Fort McMurray plant, the program was offered only to employees of Syncrude Canada and, but for his continuing employment with Syncrude Canada, he never would have received the termination payment.

The Queen v. Phillips, 94 DTC 6177 (FCA)

As a result of the announced closure by his employer (CNR) of its Moncton repair and maintenance shop, the taxpayer moved to its Winnipeg facility. A lump sum payment of $10,000 which the taxpayer received from CNR pursuant to a special agreement negotiated by his union, which was paid to any employee who purchased a house in Winnipeg to replace a house in Moncton on the transfer of his employment, was found to be taxable because it clearly was received by him by virtue of the employment relationship, and it increased his net worth by $10,000. The payment could not be characterized as a reimbursement for actual losses incurred by him in connection with the transfer.

Clemiss v. The Queen, 92 DTC 6509 (FCTD)

In finding that the reimbursement by a corporation of legal fees incurred by the taxpayer (its chief executive officer) in defending against criminal charges in relation to his alleged defrauding of the corporation was a benefit, Reed J. stated (p. 6518):

"In the present case the expenses were incurred by the plaintiff not in order to do the job but to answer criminal charges laid against him personally ... While the actions which gave rise to the criminal charges took place in the context of the plaintiff's employment with the company and his membership on the Board of Directors I could not find that there is the close nexus between their outlay and the plaintiff's position as an employee and director of the corporation, in order to conclude that they were incurred by reason of that employment or directorship."

Wargacki v. The Queen, 92 DTC 6198 (FCTD)

Two employees received a non-interest bearing loan from their employer to, in a sense, acquire its shares which were then pledged to it. The shares could only be released from the pledge, on the employees paying off their loans, at a maximum rate of 20% per annum, and while the shares were pledged they effectively were subject to the control of the company. Joyal J. found that on a proper construction of the relevant agreements, the loans were not enforceable to the limits of their purported values. Accordingly, a purported forgiveness of the principal amount of the loans in excess of the fair market value of the shares following a plunge in the shares' market value did not give rise to a benefit under s. 6(1)(a).

On the other hand, the forgiveness of the loan owing by a taxpayer for the acquisition of warrants to acquire shares of the company did give rise to such a benefit.

McIlhirgey v. The Queen, 91 DTC 5381 (FCTD)

The taxpayer was given an interest-free loan by his employer to acquire its shares, which were pledged as security for the loan. On the termination of his employment, it was agreed that his shares would be sold, the sale proceeds applied to reduce the amount outstanding under the loan, and the balance of the loan forgiven. In finding that the taxpayer realized an employment benefit equal to the amount of the forgiveness, Cullen J. stated (p. 5385) that "the forgiveness of the outstanding balance of the loan had the very real benefit ... of avoiding a decrease in his net worth".

Splane v. The Queen, 90 DTC 6442 (FCTD), briefly aff'd 92 DTC 6021 (FCA)

The taxpayer, who was asked by his employer to relocate from Ontario to Alberta, sold his home in Smith Falls for $65,000 and purchased a home near Edmonton for $63,000. In each of the subsequent three taxation years, the taxpayer was reimbursed by his employer for the difference between the mortgage interest (of 14.25%) paid by him in respect of his new home and the prior interest rate of 12.5% payable on his Smith Falls mortgage. Because the taxpayer received no economic advantage from these payments but was simply reimbursed for losses incurred by reason of his employment and the employer's requested transfer, the payments received by him did not constitute a taxable benefit.

Robertson v. The Queen, 90 DTC 6070 (FCA)

In 1974, an individual ("Pierce") who employed the taxpayer as a ranch manager, granted him an option to acquire 2500 common shares of Ranger Oil owned by Pierce at a price approximately equal to their fair market value at that time. The option was exercisable at the rate of 500 shares per year subject to the taxpayer continuing his employment. Marceau J.A. held that although there was a benefit from employment both at the time of the granting of the option and at the time of exercise (in 1980, when the price of Ranger Oil had substantially appreciated), the "first benefit, although a real one, eludes independent quantification", with the result that "only the second benefit, the quantifiable one, falls within the scope of s. 6(1)(a)":

"The employee who was granted an option to buy shares is in the same situation as the employee who was given the opportunity to purchase his employer's manufactured goods at a variance with their fair market value or the possibility to borrow money from his employer at a lower rate of interest. There is no fixed quantifiable benefit which flows to the first employee until he buys the shares just as there is no quantifiable benefit to the second employee until he purchases the goods or borrows the money."

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 248 - Subsection 248(28) carve-out to the extent of previous recognition 84

Huffman v. The Queen, 89 DTC 5006 (FCTD), aff'd 90 DTC 6405 (FCA)

A plainclothes detective was required by his superior officers to wear suits or blazers, which due to the equipment he had to carry with him, were of a larger and looser fit than his civilian clothing. Reimbursements which he received pursuant to the collective agreement were not a benefit since he simply was being restored to the economic situation he was in before being required to incur the clothing expense.

Hogg v. The Queen, 87 DTC 5447, [1987] 2 CTC 257 (FCTD)

Under a trusteed stock purchase plan the taxpayer's employer matched amounts contributed by the taxpayer to the plan and the taxpayer was entitled at any time after the first 3 years of the plan to withdraw all amounts in the plan other than amounts attributable to the employer's contributions of the two preceding years. The amounts in the plan received by the taxpayer on his retirement were not income to him in that taxation year, with the exception of amounts attributable to the employer's contributions during the two preceding taxation years, because they had vested in preceding taxation years.

The Queen v. Heggie, 87 DTC 5400, [1987] 2 CTC 173 (FCTD), briefly aff'd 94 DTC 6132 (FCA)

The taxpayer, who was president of Swift Canadian Co. Ltd. ("Swift") was asked to make himself available for consultation following the acquisition of the assets of Swift by Gainers, and pursuant to this arrangement the taxpayer was on the business premises on two or three occasions during the following year, and had two lunches with the C.E.O. Payments received by the taxpayer, and his use of the company automobile, came "within the broad scope of subsection 6(1)".

McNeill v. The Queen, 86 DTC 6477, [1986] 2 CTC 352 (FCTD)

A Quebec air traffic controller received from his employer, the federal government, the sum of $15,571 to compensate for house mortgage expenses that he might incur outside Quebec, and the sum of $2,155 which was computed as a percentage of his income, as part of a Department of Transport policy to seek to relocate controllers with anglophone ancestry to outside Quebec so as to avoid labour relations problems. The sum of $15,571 was not received by the controller in respect of his employment. The payment "was primarily motivated by considerations extraneous to the employment, namely public and labour relations considerations". Secondly there was no benefit to the controller (albeit he was under no obligation as to how he should spend the sum) because the effect of the payment of the sum was merely to partially reimburse him for the capital loss he incurred on his relocation. Although the sum of $15,571 was thus non-taxable, no proof was put forward by the controller "to show that he actually suffered other losses due to his relocation equal to the $2,155.41 he received, and a benefit accordingly accrued to him under s. 6(1)(a) in respect of this amount".

The Queen v. Savage, 83 DTC 5409, [1983] CTC 393, [1983] 2 S.C.R. 428

$300 received by an employee of a life insurance company pursuant to its policy of paying such amounts to all of its employees who passed the difficult Life Office Management Association courses would, in the absence of s. 56(1)(n), have been taxable as falling within the broad words of s. 6(1)(a). Although to be taxable under s. 6(1)(a) a payment must be received in one's capacity as employee, there is no requirement that "the payment must partake of the character of remuneration for services".

Words and Phrases
in respect of

Hart v. The Queen, 82 DTC 6237, [1982] CTC 275 (FCA)

A farming company owned by Hart paid the costs of a sightseeing tour made of Australia by Hart. Although the tour program was predominantly concerned with agricultural activities, points and activities of general interest also were included. The finding of the trial judge, that 1/2 of the payments by the company should be included in Hart's income as a benefit, was upheld.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 180 - Subsection 180(3) 53

The Queen v. Demers, 81 DTC 5256, [1981] CTC 282 (FCTD)

The monthly amounts paid to the taxpayer while employed by the Organization of American States included the monthly pro-rated portion of the sum of$4,280, which was intended to help compensate him for the high cost of living in Haiti during his 12-month posting there. As this amount did not represent reimbursement for specific expenses, and instead represented an adjustment to the taxpayer's remuneration (albeit, one intended to take into account variations in the cost of living experienced in the jurisdiction in question), this amount represented part of the taxpayer's taxable remuneration.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 6 - Subsection 6(6) 81

Phaneuf Estate v. The Queen, 78 DTC 6001, [1978] CTC21 (FCTD)

The taxpayer purchased shares of a corporation ("Ogilvie") for their par value, which was significantly below their fair market, as a result of a direction in the will of the founder of Ogilvie that his executors sell common shares to employees of Ogilvie for the shares' par value. It was held "that this provision was simply one of his bounty to his employees as persons and not in any sense as renumeration for their services as employees", and there accordingly was no income inclusion in the employee's hands pursuant to s. 6(1)(a). It was irrelevant that the taxpayer purchased the shares subject to a shareholders' agreement which had the effect of restricting ownership of Ogilvie shares to its employees.

R. v. Poynton, 72 DTC 6329 (Ont. CA)

Amounts received by the taxpayer, who was the Secretary-Treasurer and General Office Manager of a general building contractor, as a result of kickback arrangements entered into by him with subcontractors and as a result of his arranging for his employer to pay for the cost of work on his home (in both cases, done without the knowledge of the other officers of his employer) represented income to him notwithstanding that he repaid the amounts in a subsequent year, when his fraud was discovered. Evans, J.A. stated (at p. 6335) that he did not believe that the language in the statutory predecessors of sections 5 and 6 "to be restricted to benefits that are related to the office or employment in the sense that they represent a form of remuneration for services rendered".

Philp v. MNR, 70 DTC 6237, [1970] CTC 330 (Ex Ct)

sales incentives paid to 3rd-party employees were taxable benefits

A corporation ("Oshawa") whose business was the selling of groceries and other goods to a chain of independent franchised IGA retailers, paid the costs of attendance of various managers of the independent retailers and their wives for a six-day excursion to the Bahamas pursuant to a one-year sales incentive program. The managers attended a two-hour "College of Profit" on three mornings of their stay in Nassau, and the balance of their time was devoted to recreational activities, albeit with the opportunity to discuss business with other attendees. The employment benefit to the managers was set at 1/2 the cost to Oshawa. The same 50/50 apportionment between personal and business components also applied to the wives in the light of evidence that the franchises in effect were small family businesses.

Goldman v. Minister of National Revenue, 53 DTC 1096, [1953] CTC 95, [1953] 1 S.C.R. 211

The taxpayer, who was appointed as chairman of a committee of shareholders of a company in receivership in order to negotiate on behalf of the shareholders, nominated a Mr. Black to be counsel for the shareholders' committee and requested that Mr. Black give to the committee members a portion of the counsel fee received by Mr. Black. The portion of the fee which the taxpayer received was remuneration from his office, and fully taxable.

Armstrong v. Redford, [1920] AC 757, at 778 (HL)

quoting Davidson v. M'Robb, [1918] AC 304 (HL)

"In the course of employment" does not mean during the currency of the engagement, but means in the course of the work which the workman is employed to do and what is incident to it.

See Also

Scott v. The Queen, docket 2014-3260(IT)G, 2017 TCC 224

a distribution from a health and welfare trust to compensate for lost insurance coverage was not a taxable benefit as it did not come within s. 6(4)

In 1980, Nortel had established a health and welfare trust (the “HWT”) for its employees. Following its insolvency and filing under the CCAA (with the related CCAA proceedings being court-supervised), it made lump sum payments in 2011 to the two taxpayers, pursuant to a court-approved settlement agreement, in satisfaction of their entitlement to payments under the HWT. Ms. Ellis, was a retired employee, who had had a vested right for the HWT to pay the periodic premiums for life insurance policies on her life (giving rise to income inclusions to her under s. 6(4)), with the insurance proceed to be paid to her beneficiary on her death. The facts for Ms. Kennedy were similar.

After finding (at para. 102) that the 2011 distribution was paid to Ms. Ellis “as partial compensation for the termination of the Group Life Plan” and (at para. 103) that such payment “providing partial compensation the loss of the status of being a member of the Group Life Plan …constituted a benefit,” Sommerfeldt J stated (at paras. 121, 124):

As explained by Bowman J in … Tsiaprailis … where, in addition to the general provision in paragraph 6(1)(a), there is “a specific [statutory provision] containing detailed conditions for the inclusion of an amount in income that would not otherwise be income” … the general provision cannot be used “to fill in all the gaps left by” the specific provision… .

I have concluded that subsection 6(4) of the ITA and Part XXVII of the ITR are specific provisions designed to include in income certain amounts in respect of insurance coverage under a group term life insurance policy. … As those specific provisions have not captured the distributions paid in 2011 by the HWT to Ms. Ellis and Ms. Kennedy, paragraph 6(1)(a) of the ITA cannot be used to fill in the gaps left by subsection 6(4) and Part XXVII or to sweep those distributions into income.

Locations of other summaries Wordcount
Tax Topics - Other Legislation/Constitution - Federal - Tax Court of Canada Rules (General Procedure) - Section 89 - Subsection 89(1) - Paragraph 89(1)(a) trust return not admitted at trial opening where no previous notice and not relied upon by CRA 211
Tax Topics - Income Tax Act - 101-110 - Section 107.1 - Paragraph 107.1(a) s. 107.1(a) in effect produced a rollover on cash distribution of mooted benefits 175
Tax Topics - Income Tax Act - Section 56 - Subsection 56(1) - Paragraph 56(1)(a) - Subparagraph 56(1)(a)(iii) payment made as compensation for termination of monthly death benefits was paid, at the least, in lieu of a death benefit 221
Tax Topics - General Concepts - Stare Decisis Supreme Court obiter accorded deference 129
Tax Topics - Income Tax Act - Section 9 - Compensation Payments surrogatum principle references "why the compensatory amount was paid," and not confined to business receipts 191
Tax Topics - Statutory Interpretation - Specific v. General Provisions termination payment that did not come within s. 6(4) should be treated as excluded from s. 6(1)(a) 141

RFC 2012 Plc v. Advocate General for Scotland, [2017] UKSC 45

payments derived from employment services are assessable even where they are agreed to be redirected to a trust with a 3rd-party trustee

Companies, including the taxpayer (“RFC”), within the Murray International group of companies, which wished to benefit an employee (generally, a footballer or executive) made a cash payment (often corresponding to a discretionary “bonus”) respecting the employee to a trust which had been set up by one of the Murray companies (the “Principal Trust”). The paying company recommended that the trustees of the Principal Trust resettle the sum in question (in their discretion) on to a sub-trust and would ask that the income and capital of the sub-trust be applied in accordance with the wishes of the employee. The beneficiaries of the sub-trust (generally, family members) were chosen by the employee. In practice, the trustees of the sub-trusts invariably gave effect to the wishes of the employee. The employee would be appointed protector of the sub-trust (i.e., with a power of appointment, and the right to change trustees), and the trustee of the sub-trust would then lend the employee the money that had been advanced to the sub-trust at LIBOR +1.5% and with a 10–year term subject to extension. On the employee’s death, the loans and interest would be repayable out of his estate, thereby reducing the value for Inheritance Tax purposes.

In finding that the amounts paid to the Principal Trust constituted “anything…that constitutes an emolument of the employment” under s. 62(2)(c) of the Income Tax (Earnings and Pensions) Act 2003, Lord Hodge stated (at paras 39, 58 and 59):

I see nothing in the wider purpose of the legislation, which taxes remuneration from employment, which excludes from the tax charge or the PAYE regime remuneration which the employee is entitled to have paid to a third party. Thus, if an employee enters into a contract or contracts with an employer which provide that he will receive a salary of £X and that as part of his remuneration the employer will also pay £Y to the employee’s spouse or aunt Agatha, I can ascertain no statutory purpose for taxing the former but not the latter. The breadth of the wording of the tax charge and the absence of any restrictive wording in the primary legislation, do not give any support for inferring an intention to exclude from the tax charge such a payment to a third party which the employer and employee have agreed as part of the employee’s entitlement. Both sums involve the payment of remuneration for the employee’s work as an employee.

Parliament in enacting legislation for the taxation of emoluments or earnings from employment has sought to tax remuneration paid in money or money’s worth. No persuasive rationale has been advanced for excluding from the scope of this tax charge remuneration in the form of money which the employee agrees should be paid to a third party, or where he arranges or acquiesces in a transaction to that effect. …

In finding that the relevant source deduction (“PAYE”) regulations pointed in the same direction, he noted that s. 21 thereof spoke of making “a relevant payment to an employee,” Regulation 12 provided that “other payees are treated as employees,” and stated (at para. 40):

I therefore read “payment to an employee” or essentially similar phrases in the subordinate legislation as a reference to the payment of the employee’s emoluments whether to the employee or to another person.

Smith v. The Queen, 2017 TCC 62 (Informal Procedure)

provision of free monthly parking pass was taxable

The taxpayer was employed by Jazz Aviation LP (“Jazz”) as a flight attendant. Based on his home location, a car was his only means of getting to the Calgary airport. Pursuant to the terms of a collective agreement, he was provided by Jazz with a monthly parking pass. The Minister assessed the taxpayer for 2011 for a $504 taxable benefit, being 12 times the monthly charge that the taxpayer would have been required to pay to the Calgary airport to acquire monthly passes.

After noting (at para. 27) that McGoldrick had found that “where the material acquisition at issue was provided to the employee primarily for the benefit of the employer,” there was no taxable benefit, Ouimet J stated (at paras 36, 39, 44 and 48), before dismissing the appeal:

…[D]espite the fact that it was important for Jazz that its flight attendants be reliable and flexible and that they report to work on time, the evidence does not show that flight attendants were required under the Collective Agreement or otherwise to commute to work by car or even to have a driver’s licence.

… The evidence did not show that flight attendants who commuted to the Calgary airport using their own car were more reliable and flexible than those using other means of transportation. …

… I was not presented with any evidence that …quantifies the effect on Jazz’s profits or costs of the use of a parking pass by Mr. Smith and/or other flight attendants.

… The only conclusion I can reach is that Jazz paid for the parking pass simply because it was required to do so pursuant to the Collective Agreement. …

Blank v Commissioner of Taxation, [2016] HCA 42

payments under profit-linked phantom units in affiliate were ordinary income when received

The taxpayer was employed by Glencore International AG (“GI”), an international commodity trading business incorporated in Switzerland, or a subsidiary from November 1991 to December 2006, with his employment in Australia commencing in 2002 when he also became an Australian resident. In 1994, GI granted him rights (Genusscheine, or “GS”) pursuant to an agreement with him and evidenced by profit sharing certificates issued pursuant to its articles of association, to share in future consolidated net income. At the same time, Glencore Holding AG (“GH”), the ultimate parent, issued shares to him for cash at their SF par value, with the shares being subject to a put in his favour, and a call in GH’s favour, exercisable, at a price equal to the par value, upon his termination of employment or certain other triggering events. The two agreements were “stapled,” i.e., the validity of each agreement was conditional on the execution of the other.

The original agreement for GSs was replaced at various junctures, including in 2005 by the “IPPA 2005” (described at para. 35 as a "novation," being "'simply a new contract standing in the place of the old'"), at which time the taxpayer was granted phantom units (Profit Participation Units, or “PPUs”) in GI for calculating his entitlement to the profit participation ultimately payable to him as deferred compensation (styled as “Incentive Profit Participation” or “IPP”) on the surrender of his rights. The PPUs were linked to GSs (in which the taxpayer had no interest) issued by GH to GI, which were to be repurchased by GH when his employment terminated. Under the IPPA 2005, his IPP became due 30 days after his termination of employment on December 31, 2006 and was payable in 20 instalments over five years (with interest). A proportion of each instalment was to be withheld and paid to the Swiss Federal Tax Administration ("the Swiss FTA") on account of Swiss withholding tax. Pursuant to a Declaration dated March 31, 2007, the taxpayer, in consideration for the “Amount” of US$160,033,328 and CHF 80,000, relinquished to GI his claims to the PPU and GS, and assigned all his GH shares to GH.

In finding that the Amount was income to the taxpayer under s. 6-5(1) of the Income Tax Assessment Act 1997, which provided that a person's "assessable income includes income according to ordinary concepts, which is called ordinary income," the Court stated (at paras 59, 61, and 63):

The terms of the IPPA 2005 expressly stated that the Amount was deferred compensation from Mr Blank's employment with Glencore Australia. … The Amount was paid as a lump sum as an additional reward to Mr Blank for the services he had performed for the Glencore Group. …

The IPPA 2005 also recorded that Mr Blank had no interest whatsoever in the GS and did not acquire any right in or title to any assets, funds or property of GI, Glencore AG or any other subsidiary. … [A] GS granted no more than a claim to a cumulative portion of the balance sheet profit, and that the claim was granted not upon the issue or allocation of the GS to the employee but upon restitution of the GS at the time the employment ceased. …

The fact that the Amount was paid after the termination of the contract of service, by a person other than the employer (here, GI) and separately to ordinary wages, salary or bonuses, does not detract from its characterisation as income if the payment is, as here, a recognised incident of the employment.

Words and Phrases
novation

Advocate Gen. for Scotland v. Murray Group Holdings Ltd., [2015] CSIH 77, [2015] BTC 36 (Ct. of Ses. (Inner House, 2nd)), aff'd sub nomine RFC 2012 Plc (formerly The Rangers Football Club Plc) v Advocate General for Scotland (Scotland) [2017] UKSC 45

income derived from service is assessable even where agreed to be redirected to 3rd party

A company in the Murray Group of companies which wished to benefit one of its employees (generally, a footballer or executive) made a cash payment (often corresponding to a discretionary “bonus”) respecting the employee to a trust which had been set up by one of the Murray companies (the “Principal Trust”). The paying company recommended that the trustees of the Principal Trust resettle the sum in question (in their discretion) on to a sub-trust and would ask that the income and capital of the sub-trust be applied in accordance with the wishes of the employee. The beneficiaries of the sub-trust (generally, family members) were chosen by the employee. In practice, the trustees of the sub-trusts invariably gave effect to the wishes of the employee. The employee would be appointed protector of the sub-trust (i.e., with a power of appointment, and the right to change trustees), and the trustee of the sub-trust would then lend the employee the money that had been advanced to the sub-trust at LIBOR +1.5% and with a 10–year term subject to extension.

Before finding that the payments made by the companies to the Principal Trust in respect of the employees were emoluments or earnings that were subject to the obligation to deduct tax under the PAYE system, Lord Drummond Young stated (at para. 56):

[I]f income is derived from an employee’s services qua employee, it is an emolument or earnings, and is thus assessable to income tax, even if the employee requests or agrees that it be redirected to a third party….[I]t is irrelevant that the redirection is through the medium of trust arrangements. It is equally irrelevant that the trustees who receive the payment, at whatever remove, exercise a genuine discretion as to what happens to the funds. The funds are ultimately derived as consideration for the employee’s services, and on that basis they are properly to be considered emoluments or earnings.

Locations of other summaries Wordcount
Tax Topics - General Concepts - Evidence Scottish Court of Session entitled to deal with questions of English law 292
Tax Topics - Income Tax Act - 101-110 - Section 104 - Subsection 104(1) Scottish and English trust concepts had similar practical effect 84

Blank v. Commissioner of Taxation, [2015] FCAFC 154, aff'd [2016] HCA 42

phantom profit participation unit amounts not income until paid by employer rather than when due

The taxpayer was employed by Glencore International AG (“GI”) or a subsidiary from November 1991 to December 2006, with his employment in Australia commencing in 2002 when he also became an Australian resident. In 1994, GI granted him rights (Genusscheine, or “GS”) pursuant to an agreement with him and evidenced by profit sharing certificates issued pursuant to its articles of association, to share in future consolidated net income. At the same time, Glencore Holding AG (“GH”), the ultimate parent, issued shares to him for cash at their SF par value, with the shares being subject a put in his favour, and a call in GH’s favour, exercisable, at a price equal to the par value, upon his termination of employment or certain other triggering events. The two agreements were “stapled,” i.e., the validity of each agreement was conditional on the execution of the other.

The original agreement for GSs was replaced at various junctures, including in 2005 by the “IPPA 2005,” at which time the taxpayer was granted phantom units (Profit Participation Units, or “PPUs”) in GI for calculating his entitlement to the profit participation ultimately payable to him as deferred compensation (styled as “Incentive Profit Participation” or “IPP”) on the surrender of his rights and which were treated in much the same way as GSs (including stapling to an equal numbers of shares in GH). Under the IPPA 2005, his IPP became due 30 days after his termination of employment on December 31, 2006 and was payable in 20 instalments over five years (with interest). Pursuant to a Declaration dated March 31, 2007, the taxpayer, in consideration for the “Amount” of US$160,033,328 and CHF80,000, relinquished to GI his claims to the PPU and GS, and assigned all his GH shares to GH.

It was then agreed between the taxpayer and GI that GI would withhold from the full amount of the first four instalments of the Amount (two of which were due in 2007) on account of Swiss withholding tax, and an agreement to this effect was executed in January 2008, at which time the amount of the first two instalments was remitted to the Swiss authority (the FTA).

In finding that payments to the taxpayer were ordinary income derived by him, Kenny and Roberston JJ stated (at paras. 84, 89-90):

That the GS, Phantom Units and PPUs were not the benefit…conferred on the appellant under the relevant profit sharing arrangements but only mechanisms for calculating his profit share to be paid on termination exposes the fact that it was the payment of this profit share that was the actual benefit conferred on the appellant under the IPPA 2005… . In this circumstance, the fact that the IPPA 2005…described this payment as “deferred compensation” was not merely a label…but was an apt description… .

…The appellant had a restricted right to assign certain rights to a personal holding company provided he had GI’s consent. We are not satisfied that the profit participation agreements in this or any other way conferred a gain at the time the GS or Phantom Units were allocated to him that might be turned to pecuniary account… .

The fact that these two kinds of agreements were “stapled”…. does not mean that the PPUs (including GS and Phantom Units) were a calculation device to determine the value of the appellant’s shares in GH… .

Respecting the timing of recognition of the 2007 instalments, s. 6.5 of the Income Tax Act Assessment Act 1997 provided that "you are taken to have received the amount as soon as it is applied or dealt with in any way on your behalf or as you direct." Kenny and Roberston JJ held (at para. 95):

The… Commissioner’s submission… postulates that income is relevantly “dealt with” on behalf of a taxpayer when the debtor (here GI) refrains from making payment of a debt due to the taxpayer at the creditor’s request. Brent v Federal Commissioner of Taxation [1971] HCA 48; 125 CLR 418 [at para. 13] indicates that more is required… . There was therefore no derivation of income in the 2007 income year when the first two instalments, though due, were merely withheld from payment to the appellant. … The applicant derived the first two instalments as income when, in January 2008, they were paid, with his agreement, to the FTA by GI on his behalf.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 115 - Subsection 115(1) - Paragraph 115(1)(a) - Subparagraph 115(1)(a)(i) no apportionment possible between resident and non-resident services 270
Tax Topics - General Concepts - Payment & Receipt payments under phantom units not received when they vested 308

Shaw v. The Queen, 2013 DTC 1214 [at 1193], 2013 TCC 256

The taxpayer and eight other managers worked for a business corporation ("Robert Ltd.") owned by an individual ("Robert"). Robert had Robert Ltd.'s assets sold to a 3rd party. The managers continued to work for the business, hired by a subsidiary of the buyer.

Starting a few months later, Robert had Robert Ltd. make alleged gifts to its former managers in several installments over approximately a year. The amount of the gifts was $10,000 per year employed - a total of $140,000 for the taxpayer. A letter from Robert indicated that the bonuses would only be payable if they continued to work for the new employer.

VA Miller J relied on the statement at para. 9 of Blanchard that, because of the breadth of the words "in respect of" in s. 6(1)(a), a benefit from an employer is a taxable benefit unless it is "wholly 'extraneous' or 'collateral' to one's employment." Although the taxpayer emphasized that he had a deep personal friendship with Robert, it was clear that the payments were within the scope of s. 6(1)(a) as posited in Blanchard.

VA Miller J stated (at para. 21):

The fact that the Appellant was not employed by Mr. Robert when he received the Payment does not alter my conclusion. ... Although the taxpayer must be an employee or an officer, it is not necessary that he be the employee or officer of the person who bestowed the benefit at the time the benefit was given: C v Minister of National Revenue, 1950 CarswellNat 33 (TAB). ...

Morissette v. The Queen, 2013 DTC 1002 [at 21], 2012 TCC 37 (Informal Procedure)

CRA issued a directive stating that meal allowances of over $17 per meal would be considered unreasonable, and on that basis the taxpayer's employer treated his $20 meal allowances as a taxable benefit.

In allowing the taxpayer's appeal, Tardif J. found that:

  • the $17 threshold was arbitrary and unsubstantiated, and therefore there was no basis to conclude that $20 was unreasonable; and
  • whether an employer treats a benefit as a taxable benefit is ultimately irrelevant to its proper tax treatment, "particularly if it is the product of a superficial and arbitrary analysis" (para. 7).

Williams v. The Queen, 2011 DTC 1087 [at 480], 2011 TCC 66 (Informal Procedure)

The taxpayer and her husband were both members of the clergy who ministered to a congregation. The taxpayer's husband's housing allowance covered nearly all of their rent and utilities, and the taxpayer had over $19,000 of housing allowance that did not go towards those expenses. Webb J. found that the taxpayer was eligible for a deduction under s. 8(1)(c)(iv) with respect to the relatively nominal portion of the rent and utilities which was not paid by her husband, but not under s. 8(1)(c)(iii). Subparagraph (iii) requires that the living accommodation be occupied "in the course of, or because of, the taxpayer's office or employment." The taxpayer was not occupying her house "in the course of" employment because occupying the house was not a part of condition of her employment. She did not occupy the house "because of" employment either (para. 20):

[T]he phrase "because of" as used in subparagraph 8(1)(c)(iii) of the Act "implies a need for a strong causal relation between" the occupation of the residence and the employment of the Appellant. ... There is no strong causal connection in this case ... as the house was not provided by her employer but was simply a house in which the Appellant and her spouse chose to reside.

Suffolk v. The Queen, 2010 DTC 1201 [at 3509], 2010 TCC 295 (Informal Procedure)

When the taxpayer moved her employment from Australia to Canada, her employer reimbursed her for the cost of purchasing various new appliances, as her Australian appliances operated only at 240 volts. In light of the distinction drawn in the Phillips case between payments made by an employer to an employee in relation to expenditures in the new location, and payments made to reimburse losses incurred by the employee as a result of a move (with only the latter being potentially non-taxable receipts), and in light of the fact that the goods left in Australia still had significant economic value, the payment made to the taxpayer was taxable.

Schroter v. The Queen, 2009 DTC 205, 2008 TCC 681 (Informal Procedure), aff'd respecting the first tax payer sub nom. Schroter, 2010 DTC 5062, 2010 FCA 98

The first taxpayer was found to have received a taxable benefit upon being given a parking pass because it was awarded on the basis of his promotion to "pay band 5", and his resulting ability now to work more overtime was primarily of benefit to him, with the benefits received by his employer being characterized as incidental. Although the quantum of the benefit was to be based on the cost-savings to him, this should not be based on the cost of public transit or the cost of parking in another lot because these alternatives would not have been satisfactory to the first taxpayer.

As to the second taxpayer, he gave evidence that his free parking pass was awarded to him primarily because he had applied for the parking pass to be used for business reasons. Accordingly, there was no benefit to him.

Schutz v. The Queen, 2009 DTC 19, 2008 TCC 523

Rossiter, ACJ applied discounts of 25% to 80% to what otherwise would be the fair market value of accommodation provided on campus to faculty and staff at a private boarding school based on the degree of disturbance and lack of privacy associated with their accommodation.

McCreath v. The Queen, 2008 DTC 5086, 2008 TCC 595

The taxpayer was required to include in his income a per-kilometre travel allowance paid to him by his employer, the Nova Scotia Liquor Corporation, for travel between his home office and the NSLC office approximately 55 kilometres away. Campbell, J. stated (at para. 12):

"I do not believe that the decisions in Campbell [2003 DTC 420], Toutove [2006 DTC 2928] can be extended to cases, such as this, where a taxpayer makes a personal decision to work from home when the employer has provided and maintains a regular office for his use."

Savard v. The Queen, 2008 TCC 62

In finding that legal and other fees incurred by the taxpayer in connection with his prosecution for crimes committed while he was employed by a different corporation than the corporation which reimbursed him for those fees were, when so reimbursed, a taxable benefit to him, Tardif, J. noted that the test was whether the reimbursements were intended to remedy a prejudice caused by his employment and, on that basis, the reimbursements were a taxable benefit.

Rachfalowski v. The Queen, 2008 DTC 3626, 2008 TCC 258 (Informal Procedure)

The taxpayer, who did not like to golf, was required by his employer to belong to a golf club. He used the facilities only very occasionally. The amount of the annual membership dues paid by his employer was not includable in his income. Bowman C.J. stated (at para. 20) that the principle to be extracted from the Canadian, U.K. and U.S. jurisprudence "is that a 'benefit' is not included in an employee's income if it is primarily for the need or convenience of the employer" and that "this is so even where it represents a material acquisition or something of value". He went on to note (at para. 24) that here "membership in the golf club was clearly primarily for the benefit of the employer" (and, in any event "the benefit, if any, to the appellant of the membership in the golf club was minimal at most".

Bowman C.J. also noted (at para. 8) that "the meaning of 'enjoy' or 'jouir de' in section 6 has the meaning of 'have the use or benefit of' or 'avoir, bénéficier (de) posséder'."

Words and Phrases
enjoyment

Bilodeau c. La Reine, 2008 DTC 2870, 2004 TCC 685

Before going on to find that legal fees incurred by the taxpayer in successfully defending its president from criminal charges laid on the basis of an indecent act allegedly performed by him in the course of his employment did not give rise to a taxable benefit, Lamarre Proulx J stated (at para. 53):

"There is no economic benefit conferred on an employee unfairly accused of sexual misconduct while carrying on his duties. In the case at hand, the charges were brought against Mr. Bilodeau personally but were dismissed. These were therefore not personal legal fees."

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 18 - Subsection 18(1) - Paragraph 18(1)(a) - Legal and other Professional Fees indecent act defence linked to work activities 91

Adler v. The Queen, 2007 DTC 783, 2007 TCC 272

Free parking passes provided to various employees of the Telus which enabled them to park at parking facilities constituted taxable benefits, with the exception of oases provided to two employees in respect of whom Telus was the principal beneficiary of the passes since the parking spaces provided to them reduced Telus's costs associated with the extensive use of their cars on Telus business.

Henley v. The Queen, 2006 DTC 3431, 2006 TCC 347, aff'd supra 2008 DTC 6017, 2007 FCA 370

The taxpayer's employer ("Canaccord" - a broker dealer) was issued broker compensation warrants in connection with an equity treasury financing by a Canaccord client, and Canaccord allocated a portion of those warrants to the taxpayer as compensation for his employment services. Sheridan J. found that at the time of the allocation of the warrants by Canaccord to the taxpayer in September 1998, the warrants constituted property to which the taxpayer had an enforceable equitable right and that as at that moment, their dealings in respect of the warrants ceased to be that of employer and employee and became those of broker and client. On this basis and the fact that the benefit received by the employer at the time of the allocation to him of the warrants (namely, their in-the-money value of 1 cent per warrant) could be measured distinguished this case from the Robertson case. The taxpayer received a benefit from employment at the time of the allocation in September 1998, and was eligible for treatment under the option and capital gains provisions of the Act when the warrants were exercised in 2000 and he sold the underlying shares.

O'Flynn v. The Queen, 2005 DTC 556, 2005 TCC 230 (Informal Procedure)

The taxpayers were able to establish that a dental plan was available to all employees of the corporate taxpayer notwithstanding that only members of two families that owned the corporation availed themselves of the dental benefits. Accordingly, the dental premiums were deductible under s. 18(1)(a), and there was no inclusion in the individual taxpayers income by virtue of s. 6(1)(a)(i).

Killinger v. The Queen, 2004 DTC 2058, 2003 TCC 904

When it was determined that the taxpayer was not eligible for the overseas employment tax credit, his employer paid him two lump sums, upon the signing by him of releases, that were calculated to compensate him for the additional tax burden of not being eligible for the credit. In finding that these payments were a taxable benefit (and also would have been salaries, wages or other remuneration under s. 5(1)), Campbell J. indicated that the true character of the payment was to make up amounts that the taxpayer felt his employer owed him as an employee and that there was no evidence to support a conclusion that the payment was made to release the employer from an action in tort.

McGoldrick v. The Queen, 2003 DTC 1375, 2003 TCC 427 (Informal Procedure), aff'd supra

The employee was provided meals free of charge at the cafeteria of his employee (the Casino Rama) and effectively was forced to eat there as employees were not allowed to bring food onto the premises and it was impractical to eat offsite. Woods J. found that the cost of these meals was a taxable benefit given that the meals represented an ordinary everyday expense, so that the receipt of the free meals improved the taxpayer's economic position. Free hams and turkeys provided to him also were a taxable benefit. However, entertainment events were not "received" by him as he only occasionally attended them, and therefore were not included in the taxable benefit.

Deputy Minister of Revenue for Quebec v. Confederation Des Caisses Populaires et d'Economie Desjardins Du Quebec, 2002 DTC 7404 (Que. CA)

The reimbursement of meal expenses [and transportation expenses] incurred working overtime did not give rise to a taxable benefit, given that such expenses would not normally have been incurred, and while the food the employee otherwise would have consumed at home was still intact, this small saving should be ignored.

Anderson v. The Queen, 2002 DTC 1876 (TCC)

The taxpayer, who was a tradesman employed by a natural gas utility, kept all the tools and instruments required by him to maintain and repair the equipment involved in the transmission of natural gas in a pickup truck owned by his employer, and was required by his employer to keep the pickup truck at home at the end of the day. He was assessed on the basis that there was a benefit to him in respect of the pickup truck (which was not an automobile for purposes of the Act) on days when he drove the truck to the office where an assigned desk was used for storing paperwork, or when he was on standby (but not on those days when he drove directly to a job site).

Beaubier T.C.J. found that there was no benefit given that the pickup truck in essence was his work place and was required by his employer not to be used for personal use.

Chow v. The Queen, 2001 DTC 164 (TCC)

The provision of free parking privileges to two employees of Telus did not give rise to employment benefits to the employees given that in the case of the first employee, the parking space allowed him to work later hours without Telus being required to provide taxi fares, and in the case of the second employee, the parking space allowed him to report for work at 5:00 a.m. in Alberta in order to facilitate business dealings with Toronto.

Bure v. The Queen, 2000 DTC 1507 (TCC)

A fee paid by a hockey club directly to an agent of the taxpayer who negotiated a contract between the taxpayer and the hockey club represented a taxable benefit to the taxpayer.

Saskatchewan Telecommunications v. The Queen, 99 DTC 1306 (TCC)

No benefit was conferred by the taxpayer on its employees through the provision to them of parking stalls at substantially less than the market rate (or, in some instances, for no charge at all) on the basis of evidence that the employees were required, by and large, to travel from time to time from their assigned offices in the course of various duties assigned to them by the taxpayer and that their use of the parking facility after office hours for their personal use was relatively minimal.

Dunlap v. The Queen, 98 DTC 2053 (TCC)

The taxpayer received a benefit from employment equal to the preset per-person charge paid by his employer to a hotel for the cost of the taxpayer and a guest attending the annual firm Christmas party which consisted of a dinner, open bar and over-night accommodations at the hotel.

Landry v. The Queen, 98 DTC 1416 (TCC) (Informal Procedure)

A lump sum payment made to the taxpayer by her disability insurer in settlement of her claim for long-term disability benefits was not taxable to her given that the premiums paid by her employer had been included in her income.

Jex v. The Queen, 98 DTC 1377 (TCC)

Tuition reimbursement payments received by the taxpayer from his employer (Revenue Canada) for successfully obtaining an accounting professional designation were taxable benefits to him given that the courses were taken primarily for his benefit. "The fact that an employer encourages the upgrading of skills cannot be equated with a requirement to do so" (p. 1380).

Douglas v. The Queen, 98 DTC 1001 (TCC)

Three annual lump sum payments received by the taxpayer totalling $15,000 to compensate him for higher real estate costs in the city to which he was transferred were included in his income except to the extent of the amount that was calculated to be equal to the higher mortgage interest costs he incurred in the years in question as a result of the move.

Gordon v. The Queen, 97 DTC 1529 (TCC)

off-duty police services

Amounts that the taxpayer, a police constable with the Metropolitan Toronto Police Force, received from third parties for providing off-duty services (such as security, crowd control, and traffic control) that had been coordinated with the Police Force and the Metropolitan Toronto Police Association, represented business income rather than employment income.

Siwik v. The Queen, 96 DTC 1678 (TCC)

employer interest-free home relocation loan

The taxpayer did not receive employment benefit by virtue of an interest-free home relocation loan made to him. There was no relevant distinction between the employer foregoing interest on a loan (as in the case at bar), and the employer making a payment to the employee as a reimbursement of interest paid by the employee, or to a separate financial institution to fund interest that the institution otherwise would have charged to the employee.

Gernhart v. The Queen, 96 DTC 1672 (TCC), briefly aff'd 98 DTC 6026 (FCA), Docket: A-625-96

tax equalization payment

Tax equalization payments received by a U.S. resident while employed in Canada were found to be benefits under s. 6 as well as being income by virtue of s. 5(1). Bonner TCJ. stated (at p. 1676):

"The tax equalization payment is an obvious benefit when the appellant's position is compared with that of any other resident of Canada in receipt of the same income but not in receipt of tax equalization."

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 5 - Subsection 5(1) 28

Pezzelato v. The Queen, 96 DTC 1285 (TCC)

The taxpayer's employer loaned him $250,000 to purchase a home on his move from Ingersoll, Ontario to Toronto because the taxpayer could not sell his Ingersoll home in time to finance the purchase of his Toronto home. In finding that the reimbursement by the taxpayer's employer of the interest paid by the taxpayer on the loan was a taxable benefit, Bowman TCJ. noted that the decisions of the Federal Court of Appeal in Phillips and Blanchard were irreconcilable with the earlier decisions in Splane and Ransom and that he should follow the Phillips and Blanchard cases because they were more recent decisions.

Bowman TCJ. also stated that the phrase "of any kind whatever" was not intended to add to the meaning of what constitute a benefit but to prevent the meaning of the word from being restricted by being interpreted ejusdem generis with board and lodging.

Words and Phrases
any kind whatever

Mommersteeg and Giffen v. The Queen, 96 DTC 1011 (TCC)

"Free" air travel received by members of the taxpayers' families as a result of the taxpayers' participation in frequent flyer plans represented a benefit from employment given that such free travel became available to the employees because they travelled in the course of their employment. The fact that other conditions unconnected with employment also had to be met in order to receive the free travel (i.e., membership in the frequent flyer plans) was of no consequence.

The value of a "reward" ticket received by each taxpayer for travel by business or first class was "equal to that proportion of an unrestricted business or first class fare which the price of the most heavily discounted economy class fare on that flight is of the price of a full fare economy class ticket" (p. 1017).

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 231.1 - Subsection 231.1(1) 56

Cook v. The Queen, 95 DTC 853 (TCC)

A lump sum that the taxpayer received in settlement of her action against Great-West Life Insurance Company for its denial of benefits under a disability policy issued to her employer represented a taxable employment benefit, given that such sum arose out of the contract between her employer and Great-West. The decision in Peel v. MNR, 87 DTC 268 (T.R.B.) should not be followed, because it did not give effect to the broad meaning according to the phrase "in respect of" in The Queen v. Savage, 83 DTC 5409 (SCC).

Bolton v. The Queen, 95 DTC 277

In finding that the taxpayer received a benefit when a second mortgage on his Alberta home owing by him to his employer was settled for less than the amount owing by him, Sarchuk TCJ. found that section 41 of the Property Act (Alberta) merely restricted the ability of the mortgagee to collect an amount, but did not affect the quantum of liability of the taxpayer. Accordingly, the taxpayer's counsel was unsuccessful in a submission that no benefit was received by virtue of the discharge of the second mortgage because it did not represent an amount still owing by the taxpayer. Sarchuk TCJ. also found that the forgiveness of the balance of the loan occurred as an integral part of the arrangements under which the taxpayer's employment was brought to an end by mutual agreement with the employer, with the result that the amount in question was a benefit received by the taxpayer in respect of his employment.

Zaugg v. The Queen, 94 DTC 1882 (TCC)

Interest subsidy payments paid directly by the taxpayer's employer that were calculated to compensate him for the higher mortgage that he required in order to obtain equivalent accommodation on his transfer from Calgary to Toronto, did not give rise to a benefit from employment.

Norris v. The Queen, 94 DTC 1478 (TCC)

A loan owing by the taxpayer to a corporation to which he provided his services in his capacity as employee of a management company constituted employment income to him when forgiven given that the taxpayer would not initially have received the loan had he not been an employee of the management company. Brulé TCJ. stated (p. 1482) that "the fact that the benefit is conferred not by the employer but by a third party does not change the characteristic of an amount received as a benefit".

Stevens v. MNR, 93 DTC 291 (TCC)

The taxpayer, who was the employee of a company that assembled and sold tour packages, was found to have received a taxable benefit equal to the average cost to the company of airline seats which it chartered when the company provided to the taxpayer, along with other employees, the right to use seats which the company had been unable to sell to customers. It was irrelevant that there were benefits to the company from having its employees acquire first hand knowledge of the facilities at various vacation sites. It also could not be said that the seats had no value to the employee given that she had applied for travel at around that time to the specified sites and given her failure to discharge the onus of proving some other value was more reasonable.

Pepper v. Hart, [1992] BTC 591 (HL)

A private college operated a concessionary scheme allowing sons of staff members to attend the school for 20% of the normal fees. In finding that this did not give rise to a taxable benefit under a section which referred to the "expense incurred in or in connection with" provision of in-house benefits, it was found that this section referred to the additional expenses attributable to each boy (such as food, stationery and laundry) rather than a proportion of all the running expenses of the school.

Mairs v. Haughey, [1992] BTC 373 (C.A.)

A lump sum which an employee of a company received from the Department of Economic Development in consideration for giving up his rights under a redundancy scheme was found not to be "benefits and facilities of whatsoever nature" provided to him "by reason of his employment" for purposes of s. 154 of the Income and Corporation Taxes Act 1988. He received the payment by reason of giving up his right to get a payment if he became redundant, and not by reason of his employment. In addition, there was no benefit because "the money received was paid to him, by way of fair valuation, in consideration of his surrender of a right to receive a larger sum in the event of the contingency of redundancy occurring" (p. 406).

O'Leary v. McKinlay, [1991] BTC 37 (Ch. D.)

An arrangement under which the taxpayer's employers made an interest-free loan, repayable on demand, to a trust of which the taxpayer was the principal beneficiary and that deposited the loan proceeds with a bank in Jersey, was found to give rise to an emolument from the taxpayer's employment, equal to the interest earned on the bank deposit, given that the practical effect of the arrangement was that the taxpayer became entitled to receive the interest paid by the bank so long as he continued to play football for his employer, and because he was not free to invest the loan in any way he chose (so that the interest income was not investment income).

Dundas v. MNR, 90 DTC 1529 (TCC)

On the assumption that a payment made to a taxpayer in respect of the termination of his rights under a stock option agreement by virtue of an amalgamation constituted damages for the breach of that agreement, such payment was taxable under s. 6(1)(a) on the basis of the dictum of Pigeon in the Cewe case that "damages payable in respect of the breach of a contract of employment are certainly due only by virtue of this contract".

Locations of other summaries Wordcount
Tax Topics - General Concepts - Stare Decisis 60

Glynn v. C.I.R. (Hong Kong), [1990] BTC 129 (PC)

The taxpayer was held to have derived a "perquisite" of employment equal to the amount of his daughter's school fees which his employer had agreed under his contract of employment to pay directly. "There is no difference between a debt of the taxpayer discharged by an employer pursuant to the contract of service and money paid for the benefit of an employee by his employer pursuant to the contract of service." (p. 129)

Locations of other summaries Wordcount
Tax Topics - Statutory Interpretation - Prior Cases 52

Otter v. Norman, [1988] 3 WLR 321 (HL)

The provision of a continental breakfast was "board".

Pellizzari v. MNR, 87 DTC 56 (TCC)

The taxpayer, and the corporation of which he was sole shareholder, director and officer, were charged under the Criminal Code in connection with an alleged overbilling of clients of the corporation. The charges ultimately were dropped.

In finding that the payment by the corporation of the legal fees of $15,000 gave rise to an income inclusion to the taxpayer under s. 5(1), Couture C.J. stated (at p. 58) that he was "satisfied that the amount of the $15,000 paid by the corporation over two taxation years must be allocated between the two taxpayers since each one of them was charged and legal services were rendered to each one of them accordingly".

Locations of other summaries Wordcount
Tax Topics - General Concepts - Effective Date 73
Tax Topics - Income Tax Act - Section 15 - Subsection 15(1) benefit qua employee 149

Abbott v. Philbin, [1961] AC 352, [1960] 2 All E.R. 763, : [1963] UKHL TC_39_82 (HL)

appreciation in stock options was not attributable to employment

An executive in October 1954 was granted by his employer upon the payment by him of £20 a non-transferable option to acquire, within the following ten-year period, shares of his employer at a price equal to their market value in October 1954. The granting of the option gave rise to a "perquisite" or profit of his employment, i.e., something which could be turned to pecuniary account, and the exercise of the option in March 1956 (when the option was in the money) therefore did not give rise to a perquisite. Viscount Simonds stated (at 367, AC):

There could not be one perquisite at the date of the grant and a second perquisite when the shares were taken up. ... I do not find it easy to say that the increased difference between the option price and the market price in 1956 ... arises from the office [of employment]. It will be due to numerous factors which have no relation to the office of the employee, or to his employment in it.

Lord Radcliffe stated (at 379):

The advantage which arose by the exercise of the option ... was not a perquisite or profit from the office during the year of assessment: it was an advantage which accrued to the appellant as the holder of a legal right which he had obtained in an earlier year ... . The quantum of the benefit, which is the alleged taxable receipt, is not in such circumstances the profit of the service: it is the profit of his exploitation of a valuable right.

Wilkins v. Rogerson (1960), 39 TC 344 (C.A.)

The taxpayer's employer advised its male employees that if they went to a tailor to be fitted for any combination of a suit, overcoat or raincoat, the employer would pay the cost of the new clothing, up to a limit of £15, directly to the tailor. The value of the "perquisite or profit" realized by the taxpayer by virtue of his employment was the amount for which he would have been able to resell his new suit (£5) rather the cost to his employer of his new suit (approximately £15). Harman L.J. stated (p. 353):

"The taxpayer has to pay on what he gets. Here he has got a suit. He can realize it only for £5. The advantage to him is, therefore, £5. The detriment to his employer has been considerably more, but that seems to me to be irrelevant ..."

Administrative Policy

14 September 2017 Roundtable, 2017-0703881C6 - CPA Alberta 2017 Q17: Electric Vehicle Taxable Benefits

benefit from employer-provided charging station

An employee who has been provided with an electric car by an employer for use in performing his or her employment duties, and a charging station for this car is installed at the employee’s residence. Would the installation of the charging station be a benefit outside the automobile benefit provisions? CRA responded:

Where an employer provides an employee with an electric vehicle for use in performing employment duties and installs a charging station at the home of that employee, it is our view that in many cases the employer would likely be the primary beneficiary, provided that ownership of the charging station is not transferred to the employee, and that its cost (including installation) is reasonable in the circumstances.

However, this would not be the case if the charging station is owned by the employee.

As the charging station draws on the employee’s electricity, the employee is reimbursing the employer for a portion of the operating costs. CRA stated in this regard:

[I]f an employer reimburses an employee for reasonable employment-related electricity costs paid by the employee, the reimbursement will not generally give rise to a taxable benefit.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 6 - Subsection 6(1) - Paragraph 6(1)(k) operating expense benefit from vehicle charging station reduced by employee's related personal electricity bill 78
Tax Topics - Income Tax Act - Section 8 - Subsection 8(1) - Paragraph 8(1)(h.1) requirements for employee deduction of electricity costs for home vehicle charging station 154

17 February 2017 External T.I. 2016-0662341E5 - Airline passes – retired and current employees

use of space-confirmed, but not standby, passes by airline employees is taxable
For French version, see 2016-0669931E5 F

Will S2-F3-C2 be revised to reflect the administrative policies in IT-470R, paras. 42, 44 respecting standby airline passes provided to current airline employees (“current employees”) and standby and space-confirmed airline passes provided to retired airline employees (“retired employees”)? CRA stated:

[S]tandby airline passes used by current employees are not taxed. …[T]he use of space-confirmed airline passes by current employees continues to be a taxable benefit… . The fair market value of the space-confirmed airline pass will generally be the amount the employee would have had to pay for the same benefit, in the same circumstances, if there was no employer-employee relationship.

…[S]tandby and space-confirmed airline passes used by retired employees are not taxed. …

S2-F3-C2… provide[s] CRA’s interpretive positions, not administrative policies. … The CRA webpage, Benefits and allowances, will be updated to include these administrative policies.

15 November 2016 TEI Roundtable Q. 1, 2016-0670911C6 - Agenda questions for November 2016 liaison meeting

reduced benefit from incentive trip where employment performance/detailed receipts/$500 exception for 3rd party benefit reporting/benefits at FMV

a. “Incentive” Trips (S2-F3-C2, para. 2.25)

Would CRA amend S2-F3-C2, para. 2.25 (“However, where an employee receives a trip as an employment incentive or award and is not engaged in employment/business activities during a substantial part of each day of the trip, the employee is the primary beneficiary….”) to account for trips that may be viewed by employees as “incentives” but serve a primary business purpose for the employer? CRA responded:

Paragraph 2.25 does recognize that employment-related activities may be part of an incentive or award trip. The last sentence of paragraph 2.25 states “If the employee is required to perform employment duties during that trip, any benefit included in the employee’s income may be reduced for any actual employment-related activity.” In your example, if a sales team is awarded a trip for achieving a set target and they are required to perform employment duties while on the trip, then the benefit may be reduced to the extent of the employment-related activities.

b. Detailed receipts (S2-F3-C2, para. 2.16)

Could CRA amend S2-F3-C2, para. 2.16 to reflect that “detailed receipts” are not always required? CRA responded:

The definition of reimbursement is consistent with Verdun…, which states “Even when these amounts are…reasonable estimations of the costs…[they are] additional remuneration, not…reimbursement of expenses, which require detailed receipts….”

In most cases, the best evidence to show how much was spent is the actual receipt (for example, an invoice). …

c. Third-party benefit reporting

Could CRA amend S2-F3-C2, paras. 2.27-2.28 to clarify which party has the reporting responsibility for third-party benefits – and would CRA consider extending the same $500 reporting threshold for non-cash gifts to benefits received from third parties? CRA responded:

…We will consider adding a link to RC4157 to paragraph 2.69.

The $500 reporting threshold that exists for non-cash gifts and awards received from an employer will not be extended to benefits received from third parties. However…[i]f the amount of the payment is $500 or less, CRA generally waives the T4A reporting requirement unless income tax was withheld at source…[or in the case of] group term life insurance benefits.

d. FMV benefit valuation

Could CRA amend S2-F3-C2, para. 2.26 to include the statement in 2010-0377261E5 that “Where the fair market value cannot be determined with any degree of certainty, it may be reasonable to consider the employer’s cost as a measure of the benefit.” CRA responded:

Paragraph 2.26 will be revised to better reflect Spence… [where t]he FCA… noted that “costs of the benefit to the employer is the wrong instrument to assess the value of the benefit. …”

24 June 2016 External T.I. 2015-0571471E5 F - Passe de ski familiale

no taxable benefit if all employees given season’s pass at ski resort/gift policy also applicable

An employer operates a ski resort open to the public and offers its employees a family ski pass, that provides access to the ski or snowboard runs for the ski season, in the form of a Christmas present or on another special occasion. After noting that “it is reasonable to consider that the benefit conferred on the employee is an economic benefit and is measurable and quantifiable,” and that CRA had “some doubts that a Season Pass is necessary for the performance of the duties of all the groups of employees listed and that, in all cases, the benefit accrues primarily to the employer,” so that there otherwise would be a taxable benefit, CRA noted that it had an administrative policy (for no benefit recognition) “where employees generally are permitted to use their employer's recreational facilities free of charge,” and that this position extended to ski resorts. However, this administrative position

does not apply to situations where recreational facilities are made available to a limited number of employees or particular groups of employees [and]… is also not applicable to the portion of the benefit offered to family members.

Furthermore, CRA’s gift policy would apply (respecting a benefit provided:

If it is shown that the Season Pass is offered to the employee as a gift and not as compensation… [T]his policy allows an employer to give an employee an unlimited number of non-cash gifts and awards with a combined total value of $500 or less without tax impact to the extent that the total fair market value ("FMV") of these gifts does not exceed $500 per calendar year. Any amount in excess of the $500 limit must be added to the employee's income as a taxable benefit… .

7 October 2016 APFF Roundtable, Q.8

policy on employees’ purchases of discounted merchandise excludes condos

A timesharing condo of Corporation A is provided through the property manager to the public at $150 per day, with the manager then paying rent of $100 per day of use to Corporation A. The services contract with the manager provides that Mr. A (a shareholder-employee of Corporation A) can reserve the condo for personal use for up to 30 days per year. When this occurs, Mr. A pays Corporation A $70 per day, equalling its costs. How is any taxable benefit computed to Mr. A under s. 6(1)(a), or s. 15(1)? CRA responded:

[T]he condominium is not merchandise that Company A sells at a discount to its employee. Thus, the administrative policy regarding discounts on merchandise stated in T4130…does not apply… .

[T]he value of a benefit corresponds to the price that an employee would have to pay, in similar circumstances, to obtain the same benefit from the corporation if he or she were not an employee. …

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 15 - Subsection 15(1) T4130 policy re discounted merchandise purchases inapplicable to shareholders 127

10 June 2016 External T.I. 2015-0587131E5 F - Remboursement de frais de repas

meal reimbursements within same metro area not a taxable benefit if purpose is to enhance efficiency

In response to an inquiry on the taxability of the reimbursement of meal expenses to employees, CRA stated:

[A] meal expense reimbursement for travel within the municipality or metropolitan area could be excluded from an employee's income in certain circumstances. Where the principal objective of the reimbursement of meal expenses is to ensure that the employee's duties are undertaken in a more efficient manner during the course of a work shift, then the employer could be the one who principally benefits. …[T]he fact of having business reasons for providing benefits to employees does not automatically lead to the conclusion that the employer is the primary beneficiary. …

[W]here an employee incurs meals expenses for travel outside the municipality or metropolitan area [of the employer's establishment] and the employee is reimbursed by the employer, this amount is not included in the calculation of employment income because this travel mainly benefits the employer.

S2-F3-C2 - Benefits and Allowances Received from Employment

Benefit qua shareholder

2.3 Unless the particular facts establish otherwise, there is a general presumption that an employee-shareholder receives a benefit or an allowance in their capacity as a shareholder when the individual can significantly influence business policy. This presumption may not apply if:

  • the benefit or allowance is available to all employees of the corporation; or
  • all of the employees are shareholders or individuals related to a shareholder, and the benefit or allowance is comparable (in nature and amount) to benefits and allowances generally offered to non-shareholder employees of similar-sized businesses, who perform similar services and have similar responsibilities.

Relations

2.12 …[B]enefits that an employer provides to an individual who does not deal at arm’s length with an employee, such as the employee’s spouse, child, or sibling, are generally included in the employee’s income.

Measurement of benefit

2.14Lowe...confirmed that generally, the value of a benefit will be included in an employee’s income under paragraph 6(1)(a) where the employee or an individual not dealing at arm’s length with the employee:

  • receives an economic advantage measurable in monetary terms; and
  • is the primary beneficiary of the benefit.

Travel

2.20 Travel between an employee’s home, including a home office, and a regular place of employment…is generally personal travel. … However, if transportation between an employee’s home and a regular place of employment is provided by an employer for security reasons, or if public and private vehicles are not allowed or practical, then such travel is not considered personal. Where an employer requires an employee to proceed directly from home to a point of call (for example, a client’s office), return home from a point of call, or travel between two regular places of employment, such travel is employment travel. …

2.21 … An employee may have more than one regular place of employment if the employee regularly performs their employment duties at more than one work location.

2.22 ....

Example 3 – Travel from home office

...The employee regularly works from home, but attends bi-weekly meetings at the head office. The head office is a regular place of employment for the employee. As noted..., travel between an employee’s home (including a home office) and a regular place of employment is personal travel.

Incidental v. primary benefit

2.23 ... McGoldrick...held..., “[w]here something is provided to an employee primarily for the benefit of the employer, it will not be a taxable benefit if any personal enjoyment is merely incidental to the business purpose ….”

2.24 ...[T]he following...may suggest...the employer is the primary beneficiary...:

  • Does the employer have a business purpose for providing the benefit?
  • Is the benefit required for the employee to perform the employment duties more effectively?
  • Is the benefit required to fulfill a condition of employment?
  • Does the employer have a moral or contractual obligation to provide the benefit....[then providing example of providing home security system for prosecutor at risk]

2.25 Where an employer requires an employee to take a trip for employment-related reasons, the employer is the primary beneficiary of the trip. ... However, where an employee receives a trip as an employment incentive or award, the employee is the primary beneficiary... . If the employee is required to perform employment duties during that trip, any benefit included in the employee’s income may be reduced for any actual employment-related activity.

Valuation of benefit

2.26 ...Spence...determined that the value of a benefit...is the fair market value of the benefit.

Third-party benefits

2.28 When an employee receives a discount on merchandise because of their employment [including from a third party]...the value of the benefit is equal to the fair market value of the merchandise purchased, less the amount paid by the employee. However, no amount is included in the employee’s income if the discount is also available to the general public or to specific public groups.

Example 9 – Supplier award

An employee is awarded a Caribbean cruise by her employer’s third-party supplier. ... Although there is no employer-employee relationship between the employee and the supplier, she received the trip because of her employment.

Benefits received in personal capacity

2.29 [A] benefit or an amount is generally received in the person’s capacity as an individual if it is...provided for humanitarian or philanthropic reasons [providing example of disaster relief].

Specific policies on benefits and allowances

2.68 [P]olicies can be found at Benefits and allowances, or in Guide T4130, and include:

9 October 2015 APFF Roundtable Q. 20, 2015-0595681C6 F - Avantages imposables / dépenses d’entreprise

employer-provided parties, bike stands and internal recreation areas generally not taxable benefits

It is "the CRA’s position is that when an employer offers free-of-charge, to all employees, a party or other social event, there is no taxable benefit if the cost per party or other social event does not exceed $100 per person." CRA confirmed that this position extends to a "5 to 7"(congregating for free after-work drinks) or a team lunch of a social nature.

"When the usage of a bike stand area [on the employer’s facilities] by an employee is difficult to quantify and measure, the CRA is of the view that a benefit is not required to be included in computing the income of the employee who uses the bike parking stand." Furthermore, "the furnishing of internal recreational facilities of the employer offered to all the employees does not give rise to a taxable benefit to them."

5 March 2015 External T.I. 2014-0553241E5 F - Bornes de recharge – avantage imposable

no benefit from free car-charging station

An employer installs a charging station for electric vehicles at the workplace. Is there a taxable benefit? CRA responded:

[T]here is only one terminal… that it is available to all employees and… the taxable benefit to be included in the computation of the employees' income using the station would be nominal compared to the cost to the employer of managing that benefit. In these circumstances… [we] accept treating...this benefit in the same way as that of non-guaranteed parking spaces, that is, on a first-come, first-served basis. Therefore, no taxable benefit should be included in computing the income of employees using the charging station.

4 February 2015 Internal T.I. 2014-0561571I7 F - Remboursement des frais d'activité physique

reimbursement of employee physical activity expenses is taxable benefit

Within the context of its "Health Program," the "Employer" reimburses XX% of physical activity expenses incurred by all its employees up to $XXX per employee per year. Are the reimbursements a taxable benefit? The Directorate responded:

]T]he amount of the reimbursement of physical activity expenses by the Employer should be included in computing the income of its employees.

While… the Health Program can contribute to improving employee well-being and satisfaction, thereby generating an overall benefit for the Employer,…the Health Program is a program for the reimbursement of expenses of a personal nature to employees and has, at most, an incidental impact on the operations of the Employer.

18 December 2014 External T.I. 2014-0523711E5 F - Allocation pour déménagement - achat de meubles

allowance that is capped at documented expenses might not be an allowance/reimbursing new furniture might be taxable benefit

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?

In addition to discussing the treatment of an allowance, CRA indicated that the amount could possibly be viewed as an expense reimbursement, given that “if the supporting documents were submitted in order to fix the compensation amount based on the cost of the items purchased, the compensation amount would possibly be a reimbursement of the expenses which is limited to a maximum,” and then stated:

In the case of a compensation amount to reimburse a portion of the purchase of furniture or supplies…it would be necessary to determine whether the reimbursement confers a measurable and quantifiable economic benefit on the employee. If such an economic benefit exists, we are of the view that reimbursement of the purchase price of furniture or supplies would primarily benefit the employee and would constitute a taxable benefit to the employee….

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 6 - Subsection 6(1) - Paragraph 6(1)(b) favourable policy on relocation allowances does not extend to costs of new goods 165

15 December 2014 Internal T.I. 2012-0445361I7 F - Remboursement de frais de déménagement

reimbursement of moving expenses not a taxable benefit if such moving expenses otherwise deductible under s. 62 which, in the case of multiple moves, can turn on whether there is ordinary residence at each location

The "Employee,” who worked and resided in Canada at "Location 1," was assigned abroad by his “Employer” (to "Location 2"). In a subsequent taxation year, he was assigned directly to another country abroad ("Location 3"). However, the employee sold his residence at Location 1 (the "Residence") only at the time of his assignment to Location 3. After his assignment to Location 3, he returned to a place in Canada ("Location 4") where he acquired a new residence.

Would the Employer’s reimbursement of the expenses of the Residence sale be a taxable benefit. What about the possible reimbursement of expenses of purchase of a new residence at Location 4 upon completion of the Location 3 job?

After stating that “there is no taxable benefit…[where] the reimbursement is made primarily for the benefit of the employer” and that “the reimbursement by an employer of an employee’s moving expenses, does not constitute a taxable benefit…where those expenditures would also qualify, were it not for the reimbursement, as eligible moving expenses under section 62,” CRA indicated that there can be an "eligible relocation" where the individual is absent from Canada but resident there provided that the conditions stipulated in the definition are satisfied, including that the taxpayer ordinarily resided before and after the relocation at the “old” and “new” residence, respectively, with the term "ordinarily reside" having the same meaning as "ordinarily resident."

After further indicating that “the notion of ‘ordinarily reside’ relates more to everyday life than to the permanent nature of the situation,” CRA stated:

If it is established, on the facts, that the employee ordinarily resided at each of Location 1, Location 2 and Location 3, moving from Location 1 to Location 2, and then from Location 2 to Location 3, could each be considered as an "eligible relocation" if all other conditions are met.

Expenses related to the sale of the residence at Location 1 at the time of the move from Location 2 to Location 3 would not be deductible in computing the taxpayer's income because the residence at Location 1 would no longer be considered to be the old residence during the eligible relocation from Location 2 to Location 3. …

If it is instead established on the facts that the taxpayer did not ordinarily reside at Location 2 before ordinarily residing at Location 3…[e]xpenses related to the sale of the residence at Location 1 would be considered expenses of the move from Location 1 to Location 3….

However, there may be other situations in which the reimbursement was made primarily for the employer's benefit and in which, therefore, the reimbursement was not a taxable benefit to the employee.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 2 - Subsection 2(1) criteria for determining “ordinarily resides” under s. 62 (coterminous with “ordinarily resident” under s. 250(3)) 368
Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Eligible Relocation expenses re selling a Canadian home after a 2nd relocation abroad are non-deductible if no ordinary residence at 1st location abroad 255

27 May 2014 Internal T.I. 2014-0521631I7 F - Déductibilité d'un alcoomètre

full personal element if the expense would have otherwise been paid by the employee

An employer pays for the costs of installation and monthly recalibration of an alcohol interlock in the vehicle of one of its employees, which is used 20% for personal use? CRA stated:

[T]he employee would have personally paid those expenses if he were not employed by the employer or if the employer had not paid them.

Accordingly… there is a personal portion of the expenses related to the alcohol interlock and paid by the employer. This portion is probably the full amount paid by the employer since the expense is considered personal.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 18 - Subsection 18(1) - Paragraph 18(1)(a) - Income-Producing Purpose not necessary to show that expenditure generated income - and potential deduction where 20% personal use 120

25 April 2014 External T.I. 2013-0515621E5 F - Frais de voyage / Travelling expenses

benefit where employer pays costs of friend to accompany employee on training trip

An employee, who must undergo training outside the country, is allowed to be accompanied by a friend (who has no connection to the employer’s business) whose travel expenses (accommodation, airfare and meals) are paid by the employer. CRA stated:

[T]he employee must include in the computation of the taxpayer’s income from an office or employment, the value of the trip to the friend who accompanies the employee during the training trip.

11 February 2014 External T.I. 2013-0507421E5 - Taxable benefit - travel expenses

reimbursement for travel between home and regular place of employment is taxable benefit, but not where between RPEs

If an individual has multiple regular places of employment (RPE) and travels between them during the day, the trip from the individual’s home to the first RPE and the trip home from the last RPE is personal, whereas travel between RPEs is considered employment-related - so that reimbursement of the former would give rise to a taxable benefit.

2014 Ruling 2013-0514561R3 - Payment in lieu of continued PHSP coverage

lump sum settlements of CCAA claims under private health services plans were non-taxable

underline;">: Background. Canco is an unlimited liability company, which disposed of its businesses prior to the initial court order under CCAA proceedings staying proceedings against it and appointing a monitor, so that essentially its primary ongoing operations are the administration of unfunded retirement plans and other post-employment benefits plans including the "Plans" (being private health services plans providing coverage for hospital medical and dental claims for numerous former employees or dependants (collectively the "OPEBs") and registered pension plans (the "Pension Plans").

Proposed transactions

Former employees (and dependants where relevant) will receive under a CCAA Plan one or more payments out of the available cash pool of Canco on account of their claim for termination of coverage under the Plans in an amount equal to their pro-rata share of the aggregate settlement amount – except that claims under a Life insurance plan will be paid separately. They will be advised by the court-appointed counsel acting on their behalf that "that for purposes of calculating the non-refundable medical expense tax credit under section 118.2, neither [they] nor their spouse or common-law partner can include any amounts that would otherwise be qualifying medical expenses until such time as their cumulative medical expenses incurred since the termination of the Plans exceed the amount of the Payment received."

Ruling

The settlement payments "will not be taxable under the Act in accordance with CRA's previous administration of the rules regarding lump-sum amounts received in lieu of health and dental coverage as described in the CRA's questions and answers relating to the 2011 Federal budget," and no withholding under s. 153 or reporting on an information return is required.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 118.2 - Subsection 118.2(3) - Paragraph 118.2(3)(b) lump sum settlements of CCAA claims under private health services plans denied future credits 111

S2-F1-C1 - Health and Welfare Trusts

Employer contributions

1.32 An employee does not receive or enjoy a benefit at the time the employer makes a contribution to the health and welfare trust. To determine if and when an employee receives or enjoys a benefit provided through a health and welfare trust, each individual plan administered by the trust must be looked at separately. Contributions made by the health and welfare trust to the individual plans are treated in the same manner as if the contributions were made by the employer....

18 November 2014 External T.I. 2012-0457981E5 - Restorative payment to registered plan

employer restorative payment to RRSP or RPP to compensate for tort

Employer accidentally missed contributing, to a group RRSP or defined contribution pension plan, the Employer's portion on behalf of an employee for a time period, and will now make a restorative payment to the accounts of the employee under the Plans to compensate for the lost income from the missing contributions. Does a taxable benefit result? CRA responded:

Where a payment made by an employer into a registered plan of an annuitant is reasonable compensation for an employee's financial loss and the payment is the result of a wrongdoing or tort in the administration of the plan…the payment would not be viewed as employment income to the employee.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(q) employer restorative payment to RRSP or RPP to compensate for tort 153
Tax Topics - Income Tax Act - Section 204.1 - Subsection 204.1(2.1) employer restorative payment to RRSP or RPP to compensate for tort 77
Tax Topics - Income Tax Act - Section 60 - Paragraph 60(i) employer restorative payment to RRSP or RPP to compensate for tort 153

6 November 2014 External T.I. 2014-0528521E5 F - Payment of management fees by employer

taxable benefit on employer payment of RRSP (including LIRA) and TFSA fund management fees but not those of DPSPs or SERPs

The payment of the reasonable expenses of a DPSP or SERP (that is an SDA or RCA), such as management fees and brokerage, by the employer will not give rise to a taxable benefit. However, the payment of such expenses of a group RRSP (including an LIRA) or TFSA generally will give rise to a taxable benefit to the employees who are beneficiaries under the plans.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 146 - Subsection 146(1) - Retirement Savings Plan LIRA treated as RRSP 120

S3-F9-C1 - Lottery Winnings, Miscellaneous Receipts, and Income (and Losses) from Crime

voluntary payments

1.5 …]S]ometimes individuals receive a voluntary payment or other valuable transfer or benefit by virtue of an office or employment from an employer, or from some other person. In such cases, the amount of the payment or the value of the transfer or benefit is generally included in employment income pursuant to subsection 5(1) or paragraph 6(1)(a). (See also Guide T4130, Employers' Guide - Taxable Benefits and Allowances.)

Employer-promoted contests

1.25

Where an employer accustomed to awarding employees with a bonus establishes a scheme or giveaway contest in which the bonus or some amount in lieu of a bonus is divided among the employees as prizes following a draw, the scheme is not a lottery. The prizes are considered to be employment income taxable under subsection 5(1). However, there may be circumstances in which the value of an employer-promoted prize won by chance will not be treated as employment income but will be considered a win from a lottery scheme. In these situations, paragraph 40(2)(f) and subsection 52(4) will apply. To qualify for this treatment, the employees and their families:

  • must account for only a small percentage of the participants in a scheme,
  • must not be given a favoured position in relation to the other participants, and
  • must be subject to the same contribution requirements (if any) towards the scheme as other participants.

11 September 2014 External T.I. 2013-0495091E5 - Reimbursement of employee's foreign tax

taxable benefit from foreign tax reimbursement

Under the tax laws of Country A (a non-Treaty country), Canadian resident employees of a Canadian employer who are working there are considered by Country A to be resident there, so that they are required to remit income tax payments to Country A in respect of their worldwide income on a monthly basis. Would reimbursements by the Canadian employer for such Country A taxes be taxable benefits? Before citing Gernhart, CRA stated:

The reimbursement of an employee's foreign taxes would be a taxable benefit…under subsection 5(1), or more specifically under paragraph 6(1)(a)… . This is because the foreign taxes would be a personal expense of the employee and, when reimbursed by the employer, they would constitute a benefit or other form of remuneration stemming from the employment relationship. … [T]he employer would be required to withhold a portion of the reimbursement payments in accordance with [Reg.] 102… .

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 126 - Subsection 126(1) non-creditable foreign income taxes levied on sources outside that country 108

16 April 2014 External T.I. 2013-0514521E5 - Employer-paid Personal Trainer and Nutritionist

personal trainer/nutritionist not excluded as "counselling"

Where an employer pays, in full or part, for the cost for a personal trainer or nutritionist for its employees, the employees would generally be considered to have received a…benefit…taxable under paragraph 6(1)(a) unless it could be clearly demonstrated that the employer was the primary beneficiary of the services provided by the personal trainer or nutritionist… .[T]he employees, and not the employer, would usually be regarded as the primary beneficiaries where the employees become physically healthier and generally better able to perform their duties (e.g., sick less often, less downtime, remain fit for duty) by using the services of a personal trainer or nutritionist. …

Where counselling services are part of a program provided by a personal trainer or nutritionist, it is our view that the value of any benefit derived from such services would be difficult to separate from the value of any other benefits received or enjoyed under the program. Therefore, clause 6(1)(a)(iv)(A)…likely would not apply... .

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 6 - Subsection 6(1) - Paragraph 6(1)(a) - Subparagraph 6(1)(a)(iv) personal trainer/nutritionist not excluded as "counselling" 149

10 April 2014 External T.I. 2013-0514321E5 - Donated vacation

donated vacation/no double taxation

Employees, who are otherwise entitled to convert their vacation leave to cash, may donate a portion of their annual vacation entitlements for use by other employees ("donees") who have exhausted their vacation entitlements due to personal or family hardship. In finding that the donated vacations likely would not be an employment benefit to the donees, CRA stated:

[T]he vacation is not something to which the donee was entitled to by virtue of his or her employment; it arose as a consequence of the actions of the donors who voluntarily gave up a portion of their vacation leave in order to help the donee and his or her family. …

[However] it is the practice of the Canada Revenue Agency not to assess the same income twice. Accordingly, even if it is determined that paragraph 6(1)(a)… does apply, the amount would not be required to be included in the donee's income as long as it was included in the donor's income under subsection 56(2)… .

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 56 - Subsection 56(2) donated vacation/no double taxation 190

18 December 2013 Internal T.I. 2012-0472211I7 F - Voyages offerts par une compagnie

Caribbean sales incentive trip provided to incorporated sales reps represents a benefit to them from their corporation

The corporate "Taxpayer" annually offers an annual free trip to a southern location (perhaps a Caribbean resort) to its associated brokers and agents ("Sellers") who have attained specified sales objectives. The qualifying Sellers ("Travellers") must attend some morning briefings on the Taxpayer's products, with the same sessions being offered in Canada to the balance of the Sellers. Group dinners also are organized. Spouses are invited but do not attend the briefings (unless they also are Sellers). The balance of the time at the resort is free time or spent on organized recreational activities. Most of the Seller services are provided through a personal corporation, with the balance being proprietorships.

Respecting the taxability to the sales corporations of the value of the trips if the purpose of the trips was mostly personal, CRA stated (TaxInterpretations translation) that "the value of the trip must be included in the computation of the income of the corporation by virtue of section 9" (and similarly respecting the proprietorships). Respecting whether there would be a corresponding benefit included in the income of a shareholder-employee of the corporation (including expenses of a spouse's trip), CRA stated:

[W]here a person who is both shareholder and employee of a corporation receives a benefit from the corporation which is not provided to other employees ... there is a presumption to the effect that the person benefited as shareholder. However, if a similar benefit is provided by the corporation to all the employees, including those who also are shareholders, the latter will be considered to have received a benefit by reason of their employment. ...If the advantage is conferred by the corporation on the employee-shareholder as employee, the corporation may reduce the amount included in the computation of its income ... by the amount included in the income of the employee by virtue of paragraph 6(1)(a) [and otherwise for s. 15 benefits]. The Taxpayer must...include the value of the benefit included in the computation of income by virtue of paragraph 6(1)(a) on a T4A slip...for Travellers who provide their services through a proprietorship or a corporation.

CRA went on to state "in determining whether the amount of the advantage is included in the computation of income of an individual, we would examine whether the trip occurred mainly for personal or for business reasons."

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 67.1 - Subsection 67.1(2) - Paragraph 67.1(2)(d) Caribbean sales incentive trip provided to incorporated sales reps excluded if s. 6(1)(a) benefit to them qua employee 168
Tax Topics - Income Tax Act - Section 67.1 - Subsection 67.1(4) - Paragraph 67.1(4)(b) Caribbean sales incentive trip is "entertainment" 171
Tax Topics - Income Tax Act - Section 9 - Nature of Income Caribbean sales incentive trip provided to incorporated sales reps was s. 9 income to their corp to extent of personal portion 167

19 February 2014 External T.I. 2013-0508501E5 - Taxable benefit - medical test

employer-paid medical examinations

Before concluding (following 2001-009280) that "any employer-paid medical examination that was not required as a condition of employment will give rise to a taxable benefit," CRA quoted the statement therein that

[W]here the employee can exercise discretion as to whether to take an annual examination by the employer's physician, clearly it is not a condition of employment. As well, unless a medical exam with negative results impacts employment status in some manner, it cannot be said that the medical exam was a condition of employment.

30 December 2013 External T.I. 2013-0501351E5 - Employee award

cash awards to employees

After stating "that a taxable benefit may exist where there is any connection between a benefit and the particular office or employment," CRA found that cash community achievement awards which were available only to employees were connected to their employment and, thus, were taxable.

10 December 2013 External T.I. 2013-0490621E5 - Taxation of gift from parent to teacher

parents' donate to foundation to reduce teachers' ticket prices

A private charitable foundation, associated with a private school, holds a fundraising gala for the benefit of the school. The teachers are urged to attend and purchase tickets. Parents' donations to the foundation further reduce the teachers' cost for the tickets, which becomes apparent to them only on their ticket purchases. CRA stated:

An amount is generally considered to be received in a person's capacity as an individual, as opposed to his or her capacity as an employee, where the amount is: philanthropic; voluntary; not based on employment factors such as performance, position, or years of service; and not made in exchange for employment services. …

[A]ny further reduction in the cost of the ticket to the teachers resulting from the parent donations is likely a windfall or a gift received in the person's capacity as an individual.

26 November 2013 External T.I. 2013-0496251E5 - Workers compensation payments

employer advance against worker compensation award

An advance is provided by the employer to an employee in anticipation of a workers' compensation award. CRA stated:

Where it can be established that [it]… is to be repaid from anticipated future Board awards, the loan or advance is not considered income to the employee and is not a deductible expense to the employer. …[I]t is the CRA's long-standing position that any interest accumulating on those advances/loans will not be considered a taxable benefit to the employee.

18 November 2013 External T.I. 2013-0494891E5 - Taxability Scholarship Funds Received by Employees

3rd-party scholarships to employees with requirement to return to employment

A registered charity (the "Foundation") raises funds for the "Organization". Under the terms of the donation agreement between the Foundation and a donor to it, the Foundation created a scholarship for employees of the Organization pursuing post-graduate degrees in specific areas of study. The scholarship (which is merit based) is available only to employees who agree to continued employment with the Organization following the completion of studies. After noting that whether an economic benefit received by virtue of employment is taxable "will generally depend on whether the primary beneficiary of the educational program funded by the scholarship is the employer or the employee," CRA stated:

[C]ourses taken to maintain or upgrade employment-related skills are for the primary benefit of an employer, provided that the employee is expected to resume his or her employment for a reasonable period of time after completion of the training. It is our view that this policy can be applied to situations where the courses or training taken by an employee are paid for by a person other than his or her employer… .

6 September 2013 External T.I. 2012-0463501E5 - Reduced Interest Rate Credit Cards

The correspondent asked about the tax treatment of an employee of a financial institution who receives a credit card bearing interest on credit balances at interest rates below those charged to non-employee cardholders, but above both the prescribed rate in Reg. 4301(c) and the bank's usual rates for commercial loans. (No reference was made to the credit balances being interest-free until the due date.)

CRA considered that, assuming the advances under the cards were received as a consequence of the individuals' employment (which would be deemed by s. 80.4(1.1) to be the case if the terms, e.g., the interest rate, would have been different but for the employment), s. 6(1)(a) would not apply as the employment benefit was computed by s. 80.4(1) to be nil based on the low prescribed rate.

The words "in respect of" in s. 6(1)(a) are broader than the words "because of or as a consequence of" in s. 80.4(1). If s. 80.4(1) did not apply, the s. 6(1)(a) benefit "would generally be calculated using the interest rate differential between credit cards issued to employees and those provided to the general public (i.e. the FMV interest rate)."

12 February 2013 Internal T.I. 2013-0475631I7 - Treatment of Settlement Amounts

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), and found that a lump sum payment of tax included in the award would be included in the income of the recipient as a taxable employment benefit in the year under s. 6(1)(a).

12 July 2013 External T.I. 2013-0496281E5 - Disaster relief payment to employees

Disaster relief payments from employer to employee will not be considered employment income if "the individual received the Payment in his or her capacity as an individual, as opposed to his or her capacity as an employee." CRA listed criteria under which it would consider a payment not to be employment income, including that:

  • the individual was affected by a disaster (as described by Public Safety Canada);
  • the payment is philanthropic in purpose, voluntary, and at arm's length;
  • the payment is not made to shareholders, connected persons or executives controlling company decisions;
  • the payment is not based on performance, position, lost salary, or services; and
  • the employer has not taken a business expense deduction.

13 February 2013 External T.I. 2012-0443331E5 - Are gifts to elected officials taxable?

In response to the question as to whether gifts over $100 given to an elected official considered a taxable benefit, CRA stated:

Elected officials are subject to the same policies as employees with respect to gifts and awards. Under paragraph 6(1)(a) of the Income Tax Act (the Act), gifts and awards received by employees/officers by virtue of their employment/office are generally included in their income. The CRA's administrative policy regarding gifts and awards, including the exemption for certain non-cash gifts under $500, can be found on our website at the following link: www.cra.gc.ca/gifts.

7 November 2012 External T.I. 2012-0466681E5 F - Frais de gestion environnementale

The "écofrais," which vendors of various types of electronic products are now required under Quebec law to (at their option) add to or include in the price of such products sold in Quebec and remit to the applicable recycling agency, must be included in the determination of the fair market value of such products for purposes of computing an employee benefit when such products are gifted or awarded to an employee.

CRA stated (TaxInterpretations translation):

It appears that the écofrais are environmental charges which are incorporated in or added to the final sales price of a product, and which the enterprise has the option of making visible or not visible. Furthermore, it appears that they are not required to be presented as an addition to the initial price like for example a sales tax.

Consequently, as the payment of these charges is mandatory, taking into account that they are provided for in provincial legislation and regulations, these charges must be added in the calculation of the FMV of gifts or awards.

26 July 2012 External T.I. 2011-0431681E5 - Taxable Benefits – Recreational Facilities

CRA stated:

[A] taxable benefit would not generally arise in situations where an employer provides an in-house recreational facility and the facility or membership is available to all employees. This exemption applies whether the employer provides the facilities free of charge or for a minimal fee and the facility or membership is principally for the advantage of the employer.

An in-house fitness centre available only to employees from a specific department falls outside this exemption (even where the stated purpose is to reduce sickness and injury resulting from the nature of the work performed in that department).

CRA also noted that it does not consider the employer (rather than the employees) to be the primary beneficiary of a fitness facility or membership program unless "stringent fitness standards" are directly relevant to the requirements of the employment.

26 July 2012 External T.I. 2011-0430971E5 - Employee Discount Program

Groceries are considered "merchandise" for purposes of para. 2 of IT-470R (respecting employeee discount programs).

29 November 2011 CTF Roundtable, 2011-0425801C6 - Taxable benefit - employee computer equipment

CRA was asked to comment on "bring-your-own-device" programs for employees, under which the employee is provided with a fixed amount to purchase his or her computer equipment and is reimbursed for the lesser of a stipulated maximum amount and the amount actually paid for equipment. CRA stated:

The employee is considered to have received an economic benefit from the employer, as the employee's net purchase cost of the computer owned by the employee is less than it would otherwise have been. The amount of the economic benefit would be equal to the reimbursement received by the employee.

17 May 2013 CLHIA Roundtable, 2013-0479111C6 - WLRP Reimbursement by Insurance Corp Due to Error

The correspondent wrote that, if an employee receives amounts under a wage replacement plan and the employer and insurer mistakenly believe the amounts not to be a taxable benefit, the employee may subsequently be reimbursed for income tax payable, accounting fees, interest and penalties. CRA stated that such reimbursement would generally be taxable pursuant to s. 6(1)(a) on the basis that income tax, interest and penalties are personal expenses. Whether reimbursement for accounting fees constitutes a taxable benefit was not clear from the correspondent's facts.

23 January 2004 Internal T.I. 2003-005193 -

Damages in respect of breach of contract or a tort paid by an employer to compensate for investment losses caused by the employer as administrator of a registered plan which has been established for a group of employees are not considered employment income to the employees; nor is the employer or the employee considered to have made a contribution to the plan as a consequence of the payment of the damages.

29 January 2003 External T.I. 2003-018382 -

Payment of an employee's fees to obtain a permanent residence visa would constitute a taxable employment benefit given that such fees would not be viewed as part of the employee's relocation costs.

26 March 2001 External T.I. 2001-006909 -

The payment of ISP fees by a college for home Internet use by a senior employee likely would not give rise to a taxable benefit.

31 July 2000 External T.I. 1999-000944 -

A gross-up payment made by an employer to an employee to compensate the employee for the additional Canadian tax payable on a tax equalization payment would be considered to be income from employment which is wholly attributable to the employee's duties performed in Canada.

May 1999 CALU Conference No. 908430, Q. 6

General guidelines for determining whether benefits are provided to a recipient in his or her capacity of shareholder or employee.

30 June 1999 Internal T.I. 7-991690 -

The giving of free recreational passes to the employees of a ski resort (but not to the family members) would not give rise to an employment benefit given that knowledge of the resort and ski hill was essential for the performance of their employment duties (i.e., the employer was the primary beneficiary of the free recreational passes).

8 December 1998 External T.I. 5-982754 -

Discussion of RC's position that employer-provided free parking gives rise to a taxable benefit.

15 July 1998 External T.I. 5-981794 -

Stand-by airline passes provided to an employee do not give rise to a taxable benefit.

Income Tax Technical News, No. 15, "Christmas Parties and Employer-Paid Special Events", "Employer Payment of Professional Membership Fees".

7 May 1998 Income Tax Technical News, No. 13

"Employer-Paid Educational Costs".

12 September 1996 T.I. 962982 (C.T.O. "PHSP Cvrge for Same Sex Life Partner of an Employee")

Following the HRC decision in Moore & Akerstrom, RC has determined that a plan which provides coverage for same sex couples can meet the definition of a "private health services plan".

23 July 1996 T.I. 961808 (C.T.O. "Commissions Earned by Securities Salesperson")

A commissioned securities salesperson would be considered to be taxable on commissions "earned" (i.e., not charged by the employer) in trading securities for his or her own account.

1996 Tax Executives Round Table, Q. XI (No. 9639070)

A benefit under s. 6(1)(a) will be assessed where a mortgage interest subsidy is provided to a relocated employee, unless the following conditions are met:

  1. the subsidy is limited to only that portion of the mortgage charges that relate to the increase in interest charges on the cost of the home in the new location up to the maximum allowed by a valid market price differential, and to any increased interest charges stemming from increased mortgage interest rates for the remaining term of the previous mortgage;
  2. no principal is subsidized; and
  3. there is no change in the employee's equity in the residence.

5 July, 1995 Memorandum 950882 (C.T.O. "Taxable Benefits - Bus Passes and Parking Costs")

"Where an employer chooses to pay or subsidize the cost of an employee's bus pass, a taxable benefit is conferred on the employee."

5 January 1995 Income Tax Technical News, No. 6

Although leave to appeal the Hoefele case to the Supreme Court of Canada has been sought, Revenue Canada accepts, having regard to the Splane case (92 DTC 6021) "that where an employee incurs a higher interest rate on a mortgage as a result of an employer-requested relocation... the mortgage interest rate differential payments for the remaining term of the mortgage are not taxable".

12 April 1995 T.I. 943138 (C.T.O. "Tuition Fee Reimbursement - Taxable Benefit")

The reimbursement of employee tuition fees expended by the employees for certain professional development courses gave rise to a taxable benefit notwithstanding that the employer provided time during the normal business day, as required, for study time and to write examinations, and notwithstanding that the courses were undertaken after business hours only when they were not offered during the day. "... Where an employee undertakes a course of studies as a means of enhancing his chances of a promotion in the short term or enhancing his overall career opportunities in the long term, then the primary benefit is considered to be derived by the employee even though the employer may also benefit from the employee's higher level of education".

9 March 1995 T.I. 943182 (C.T.O. "Employee Benefit or Treatment of Addiction")

Fees paid to a licensed private hospital for accommodation, meals, and medical treatment including the cost of any medication as well as psychological, family and follow-up counselling would not be exempt under s. 6(1)(a)(iv) because more than a counselling service would be provided. However, the payment or reimbursement by an employer of the fees for such services would be exempt where the benefit is provided under a private health services plan.

26 May 1995 T.I. 950171 (C.T.O. "Self-Funded Private Health Services Plans")

A self-funded dental care plan can qualify as a private health services plan.

5 April 1995 T.I. 943304 (C.T.O. "Moving Reimb for Disability - Rel Modif to Empl New Home")

The reimbursement by an employer of the costs of disability-specific renovations or alteration to a home that an employee moves to on a relocation normally would not give rise to a taxable benefit. Other items which are not disability-specific, such as air conditioners, humidifiers and swimming pools would give rise to a taxable benefit if reimbursed.

2 August 1994 T.I. 941546 (C.T.O. "Employment Benefits - Reimbursement of Moving Exp.")

In determining whether a reimbursement of moving expenses by an employer gives rise to a taxable benefit to the employee, RC generally will look to the criteria described in s. 62 as a guide. Where the distance of the move is substantially less than 40 kilometres, the onus will be on the employee to show that the primary reason for the move is the job relocation and the hardship imposed by it.

26 July 1994 T.I. 941215 (C.T.O. "Health and Welfare Trusts")

RC would expect that temporary accumulations of cash in a health and welfare trust would be placed in relatively liquid short term investments rather than higher risk and longer term investments, in order that funds will be available to meet expected claims experience. Where there is a relatively permanent surplus, and its reduction through a premium holiday is not effected within a reasonable time, the level of annual contributions by participating employers may be seen as being in excess of that which is needed to meet their obligations under the plan and, as a result, may jeopardize the deductibility of contributions to the trust by the participating employers.

26 July 1994 T.I. 941545 (C.T.O. "Employment Benefits - Special Clothing")

Although the provision of special clothing (such as uniforms and safety footwear) would not constitute a taxable benefit, a non-accountable personal grooming allowance would constitute a taxable benefit.

21 July 1994 T.I. 941206 (C.T.O. "Reimbursement of Physician Fee to Renew Driver's Licence")

Respecting the reimbursement of the amount charged by a physician to fill out forms to renew an employee's Class A driver's licence, RC stated that:

"Where the facts show that the employee is required to pay a physician's fee as a condition of employment either directly or indirectly (i.e., as a requirement to fulfill the job-related requirement to hold a Class A driver's licence), the reimbursement of that fee will not be considered a taxable benefit to the employee."

23 June 1994 T.I. 940101 (C.T.O. "Employee Service Awards")

Where an employer provides an employee with a long term service award of jewellery, the quantum of the benefit received will be not less than the expense incurred by the employer. The "money's worth" valuation approach in Wilkins v. Rogerson, 39 TC 344 and in Heaton v. Bell, [1968] 1 All E.R. 857 is not relevant for purposes of s. 6(1)(a) as indicated in Waffle v. MNR, 69 DTC 5007.

12 April 1994 External T.I. 5-940300 -

S.6(1)(a) will apply to include in an employee's income benefits derived from past service contributions made by the employer in respect of the employee's obligation to make such contributions to a registered pension plan. However, if the employer is not required by the terms of a plan to make a particular contribution but agrees to do so as a result of an election by an employee to purchase past service, such a contribution generally would not be considered an employer contribution.

22 February 1994 T.I. 932239 (C.T.O. "Computers and Employee Benefits")

An arrangement whereby employees, who carry out their employment duties primarily at their homes and at customer premises, purchase computers at a discount from their employers, with the purchase price payable over a 24-month period by way of deduction from their monthly salaries, but with the employees entitled to monthly reimbursements over the same period totalling 75% of the purchase price, gave rise to benefits under s. 6(1)(a). RC's policy on chainsaws was distinguished on the basis of the short life of a chainsaw.

1994 A.P.F.F. Round Table, Q. 45

"A payment made by a Canadian employer to an employee to compensate for additional tax in Canada compared to the tax that would otherwise have been payable in his usual country of residence is an economic benefit that the employee receives from his employer, in the same capacity as the benefit in The Queen v. Phillips and, as a result, is a taxable benefit for the employee."

16 December 1993 T.I. 932372 (C.T.O. "Same Sex Partner Coverage for Health Care Plan")

The type of expenses which may be provided under a private health services plan are limited to those which qualify as medical expenses for purposes of the credit in s. 118.2(2) and, therefore, are limited to expenses incurred in respect of an individual, the individual's spouse or a dependant of the individual. Accordingly, coverage for same-sex spouses (who are not "spouses" for purposes of the Act) will jeopardize the status of the plan as a private health services plan.

14 December 1993 T.I. 933473 (C.T.O. "Employer Reimburse GST on New Home upon Relocation")

Since the GST payable on the purchase of a new home forms part of the cost of that new asset, any reimbursement thereof by the employer in connection with an employee relocation will be included in income in the same manner as other costs of acquiring a new residence, such as decorating, appraisal fees, new home warranty fees and finder's fees.

Revenue Canada Round Table TEI Conference, 7 December 1993, (C.T.O. "Splane & Reimburs of Increased Loan Costs on Relocation")

Comments on method of calculation of benefits where an employer pays relocation reimbursements to transferred employees in respect of increased housing costs in the new location.

Revenue Canada Round Table TEI Conference, December 1993, Q. 15, (C.T.O. "Accrued Vacation Pay")

Where an employee retires effective December 31, 1993, the amount of the accrued vacation pay at 31 December 1993 is required to be included in her income for the year that is the earlier of the year in which the accrued vacation pay is paid to her and the year she has constructively received payment thereof. The amount of the accrued vacation pay would be regarded as being constructively received in 1993 where the amount was available to her in the year, but she chose not to receive it physically until the following year.

3 December 1993 T.I. 932392 (C.T.O. "General Comments on a Flex Plan")

Although a benefit which will be non-taxable if offered outside a flexible benefit plan will ordinarily retain its non-taxable status if it is offered as an option under the plan, in order to maintain the non-taxable status of such benefits, any option to receive cash in exchange for the "flex credits" could only be available pursuant to an irrevocable election made before the beginning of the plan year and not as an option within a particular option or plan. In addition, the conversion of taxable remuneration to flex credits would result in the value of those credits being included in income at the time the conversion is made.

11 August 1993 T.I. (Tax Window, No. 33, p. 9, ¶2645)

Where the payment of insurance premiums gives rise to an employee benefit, the amount of the benefit will include sales tax on the premiums.

9 August 1993 T.I. (Tax Window, No. 33, p. 4, ¶2638)

A plan will not qualify as a private health services plan if some employees can carry forward flexible credits and others are allowed to carry forward eligible medical expenses. A plan which provides for a carry-forward period in excess of twelve months also will not qualify.

28 June 1993 T.I. 930736 (C.T.O. "Directors Liability Insurance"); (Tax Window, No. 32, p. 10, ¶2604)

A taxable benefit will not be conferred on a director or officer of a corporation as a result of the corporation paying insurance premiums or her receiving a settlement from the insurance company where the risks covered by the policy are inherent and normal occurrences in carrying out the duties of the insured. A taxable benefit also will not arise where the corporation assumes the liability of the officer or director where the indemnification does not exceed that permitted under s. 124 of the CBCA or a similar provision of a Provincial Corporations Act.

15 June 1993 T.I. (Tax Window, No. 32, p. 9, ¶2601)

Where a business is extended to take advantage of the lower airfare offered for a trip that is over a weekend, then provided the business trip was not extended to provide a vacation for the employee and the costs incurred were reasonable, a taxable benefit will not normally arise.

11 June 1993 T.I. (Tax Window, No. 31, p. 10, ¶2519)

Where an employee surrenders her rights under a phantom stock plan and receives an option to acquire shares of the employer company for an exercise price equal to the fair market value of the shares at the time the option was granted minus the value of the units under the phantom stock plan that were surrendered, there was considered to be a disposition of property (the surrender of rights under the phantom stock plan) the value of which will be included in income.

10 June 1993 T.I. (Tax Window, No. 31, p. 24, ¶2550)

The amounts paid by a corporation to hire a clothing consultant in order to help certain executives to improve their image would be included in their income under s. 6(1)(a) or s. 15(1).

4 June 1993 Memorandum (Tax Window, No. 32, p. 9, ¶2602)

Where an employee is dismissed, receives an arbitration award and is reinstated to his former position, any amounts received as part of the settlement which are in respect of out-of-pocket expenses incurred by the individual will be considered to be a taxable benefit.

5 May 1993 T.I. (Tax Window, No. 31, p. 13, ¶2526)

Where the costs of providing health care are taken into account by the employer in determining an employee's compensation, the amounts paid into the private health services plan will be considered to have been paid by the employee, with the result that the supposed payments to the private health services plan by the employer will be included in the employee's income under s. 5 or s. 6(1)(a).

11 March 1993, T.I. (Tax Window, No. 30, p. 13, ¶2465)

Where an employee is required to work at least three hours of overtime in a day, public transportation is not available or the physical safety of the employee is at risk at the time of travel, and the occurrence of such overtime is occasional, RC will not treat reimbursements for the cost of the employee's meals and travel (e.g., a mileage allowance) to be a taxable benefit.

9 March 1993 Memorandum, (Tax Window, No. 30, p. 22, ¶2469)

A reimbursement of expenses incurred by an employee as a result of a requirement on the part of the employer to travel out of town on business should not give rise to a taxable benefit.

93 C.P.T.J. - Q.23

Where a vehicle (whether owned by the employee or the employer) is regularly required to be used during business hours in the carrying out of employment duties, the value of a parking facility provided by the employer for the vehicle is not considered to be a taxable benefit.

25 February 1993 T.I. (Tax Window, No. 29, p. 21, ¶2447)

If amounts received by employees of registered financial institutions pursuant to the International Financial Business (Tax Refund) Act (B.C.) are characterized under that Act as a reduction in the amount of tax otherwise payable by an individual under the Income Tax Act (B.C.) rather than as a reimbursement of expenses, their amount will not be included in the employee's income for purposes of the Act.

8 February 1993 T.I. (Tax Window, No. 29, p. 6, ¶2427)

Discussion of a disability plan where the annual premiums required to be paid for the first ten years are in excess of what is required to insure the employees.

20 January 1993 T.I. (Tax Window, No. 28, p. 15, ¶2392)

Where an employee is required to provide tools as a condition of employment, any reimbursemet by the employer of the cost of purchasing replacement tools will be a taxable benefit.

13 January 1993 T.I. (Tax Window, No. 28, p. 16, ¶2364)

A health and welfare trust which accumulates a surplus jeopardizes its status as such. A surplus should be absorbed by a reduction in the amounts to be contributed by the employer.

8 January 1993 T.I. 923191 (November 1993 Access Letter, p. 488, ¶C5-223)

Where an employee is awarded the permanent possession of an item of jewellery, he will be regarded as being the beneficial owner thereof. For purposes of assessing the benefit received, the fair market value of the article of jewellery ordinarily will be considered to be no less than the expense incurred by the employer, and would not necessarily be equal to the amount that would be realized by the employee in an open market sale of the item.

December 1992 B.C. Tax Executives Institute Round Table, Q. 4 (October 1993 Access Letter, p. 477)

A benefit can be required to be included in an employee's income in respect of employer-paid dues or fees that are not deductible to the employer under s. 18(1)(l)(ii). This is not considered to result in double taxation as a benefit is only considered to arise where it cannot be demonstrated that membership is principally for the employer's advantage.

15 December 1992 T.I. (Tax Window, No. 27, p. 18, ¶2334)

The payment of insurance premiums on policies covering risks associated with inherent and normal occurrences in carrying out the duties of individual directors and officers of a corporation, nor the receipt of the insurance proceeds, will give rise to taxable benefits. The assumption by the corporation of director's or officer's personal liability to the extent permitted by s. 124 of the Canada Business Corporations Act also will not give rise to a benefit.

24 September 1992 T.I. (Tax Window, No. 24, p. 4, ¶2226)

Where employees of a company in a clothing business acquire items of clothing from the company at below cost, they will realize a benefit even if the merchandise displays the company's logo and the merchandise was not for sale to the general public. The amount of the benefit will be the difference between the real or fair market value of the merchandise acquired and the amount paid by the employee.

22 September 1992 T.I. (Tax Window, No. 24, p. 21, ¶2207)

The retroactive reduction by a public corporation of the face value of an employee share purchase loan so as to correspond with the fair market value of the shares will give rise to a benefit under s. 6(1)(a) or s. 15(1).

6 August 1992 T.I. (Tax Window, No. 23, p. 19, ¶2148)

$500 per month paid to an employee to cover the difference between the cost of renting a home in a location to which he was required to relocate, and the amount received by him from renting his home in the previous location (no purchaser having been found for his previous home) will be included in his income under s. 6(1).

23 July 1992 Memorandum 922191 (April 1993 Access Letter, p. 128, ¶C5-188)

re taxability of relocation allowances paid equally by the individual's employer and Agriculture Canada.

21 July 1992 Memorandum 921671 (March 1993 Access Letter, p. 64, ¶C5-184)

A description of a permissible policy for reimbursing employees for moving expenses resulting from the employer's relocation.

17 July 1992 T.I. 921205 (January - February 1993 Access Letter, p. 6, ¶C5-181)

A plan under which employees of an employer will receive rebates directly from the manufacturer upon their purchase of a vehicle gives rise to an employment benefit because such rebate is not available to the public at large. The manufacturer is responsible for reporting the benefit on a T-4 Supplementary form.

13 February 1992 Memorandum (Tax Window, No. 16, p. 1, ¶1748)

Discussion of determination of taxable benefit where individual brokers (and companions) attend off-shore "conferences" as part of an incentive package offered by mutual fund dealers.

28 January 1992 T.I. (Tax Window, No. 13, p. 20, ¶1611)

Although employer reimbursements of child care costs of an employee generally are taxable benefits, there is no taxable benefit where an employer reimburses child care costs incurred by an employee as a result of a requirement of the employer for the employee to travel out of town on business.

9 January 1992 Memorandum (Tax Window, No. 15, p. 20, ¶1692)

The onus is on the employer to provide convincing evidence that the payment of club dues on behalf of an employee is primarily for the employer's benefit.

Where the fair market value of free parking cannot be determined (e.g., in a shopping centre, or where the number of parking spaces is less than the number of employees), the employee will not be assessed for the taxable benefit.

30 November 1991 Round Table (4M0462), Q. 2.5 - Meal Allowance (C.T.O. September 1994)

RC does not consider a meal allowance paid to an employee working overtime to be income if the employee works at least three hours of overtime immediately after his normal hours of work, the allowance is reasonable (not exceeding the value or cost of a normal meal), and the overtime is infrequent or occasional.

30 November 1991 Round Table (4M0462), Q. 2.2 - Automobile (Car Rental) (C.T.O. September 1994)

Where an employee signs a lease directly with a garage and the employer agrees to pay the garage for so long as the employment continues, the payments by the employer will be considered to be part of the employee's remuneration under s. 5(1) or 6(1)(a). S.6(1)(e) and s. 6(2) will not apply because the employer (or a related person) will not have made an automobile available to the employee, given that the employer is not a party to the lease.

20 August 1991 T.I. (Tax Window, No. 8, p. 16, ¶1396)

Where a corporation grants a stock option to a spouse of an employee and the spouse subsequently exercises the option, the employee will be considered to have received a taxable benefit in the year of exercise if the fair market value of the share exceeds the option price.

91 C.R. - Q.46

The reimbursement or allowance for a payment of an employee's tax liability is taxable under s. 6(1)(a) or (b).

91 C.R. - Q.45

Although RC will not assess club dues as a taxable benefit where it is clearly advantageous to the employer's business for employees to be members, this policy does not extend to incidental benefits, such as the employee being healthier and better able to perform his duties by virtue of using the facilities of an athletic club.

Dath and Fuoco, "Flexible Employee Benefit Arrangements", 1991 Corporate Management Tax Conference Report, c. 6

Discussion of flexible employee benefit arrangements or "cafeteria plans".

28 June 1991 T.I. (Tax Window, No. 4, p. 19, ¶1322)

Discussion of benefits paid under private insurance and under workers' compensation laws.

10 June 1991 T.I. (Tax Window, No. 4, p. 28, ¶1293)

Employees are required to include in their income their share of premiums paid by their employer to an insurer in respect of legal services to be provided to employees; and the employer is entitled to a deduction for such premiums.

3 June 1991 T.I. (Tax Window, No. 4, p. 27, ¶1275)

There is a presumption that courses taken during normal working hours with employees being given time off with pay for that purpose, are primarily for the benefit of the employer, with the result that there is no taxable benefit to the employees.

14 May 1991 T.I. (Tax Window, No. 3, p. 12, ¶1233)

Although a group policy which provides automatic coverage of dependents of an employee is not within the definition of a "group term life insurance policy", where the dependent coverage is optional the employee's selection of that option effectively creates a separate policy in respect of the dependent coverage, and the portion of the premium which relates thereto is added to the employee's income.

24 April 1991 T.I. (Tax Window, No. 2, p. 20, ¶1212)

Payments which an employer makes to help offset the cost of tools which the employees were required to have will be included in the employee's income when received, and without any corresponding deduction being available.

22 April 1991 T.I. (Tax Window, No. 2, p. 13, ¶1209)

Payments made by a health and welfare trust on behalf of its members for various counselling services would be considered to be payments out of an employee trust which are included in the income of the employee under s. 6(1)(a), rather than as being exempted under s. 6(1)(a)(iv).

18 April 1991 T.I. (Tax Window, No. 2, p. 21, ¶1194)

Employees covered by a training trust fund do not enjoy a benefit at the time the contributions or grants were made to the trust, nor at the time they received training sponsored or funded by trust.

28 March 1991 T.I. (Tax Window, No. 1, p. 16, ¶1176)

Where employees have personally funded disability insurance policies and assigned their policies to a Health and Welfare Trust estblished by their employer which then pays the premiums, the plan is not a "group plan", with the result that premium payments made by the employer will be included in the income of the employees.

18 February 1991 T.I. (Tax Window, Prelim. No. 3, p. 21, ¶1121)

Description of circumstances in which an allowance paid to an employee for the purpose of purchasing protective clothing and safety accessories constitutes a non-taxable reimbursement of expenses.

22 January 1991 Memorandum (Tax Window, Prelim. No. 3, p. 20, ¶1101)

A 50% discount on automobile insurance is a taxable benefit given its extraordinary size.

18 January 1991 T.I. (Tax Window, Prelim. No. 3, p. 28, ¶1095)

A former employee who seeks damages for wrongful dismissal is not required to include in his income any pre-judgment interest awarded, and no tax is required to be withheld on the pre-judgment interest paid to him.

17 December 1990 T.I. (Tax Window, Prelim. No. 2, p. 12, ¶1055)

Retirement counselling, which unlike financial counselling does not give rise to a taxable benefit if provided without charge to employees, should be a non-recurring service for employees within 15 years of retirement where the prime emphasis is on retirement issues.

19 November 1990 T.I. (Tax Window, Prelim. No. 2, p. 16, ¶1075)

Description of circumstances under which no benefit will be included in employees' income under a supplemental pension arrangement under which a trust meeting the definition of a retired compensation arrangement obtains letters of credit in favour of each employee included in the plan.

14 November 1990 Memorandum (Tax Window, Prelim. No. 2, p. 22, ¶1043)

Commissions earned by securities salespeople on transactions for their own account effected through their employer will be included in their employment income; as will commissions earned by real estate salespersons in similar circumstances.

21 September 1990 T.I. (Tax Window, Prelim. No. 1, p. 17, ¶1006)

An arrangement under which a corporation agrees to reimburse its sole shareholder/employee for receipted medical expenses does not qualify as a private health services plan.

90 C.R. - Q1

The employment benefit from the use of a residence owned by an arm's length employer is normally based on the fair market rent that would have been paid had the employee rented from a third party.

90 C.R. - Q2

RC is appealing the Splane case.

11 June 1990 T.I. (November 1990 Access Letter, ¶1508)

In order to qualify as a "health and welfare trust" a plan must cover two or more employees. Where the only person covered is the sole shareholder and employee, RC generally will consider that the benefit is received by him as an s. 15(1) benefit by virtue of being a shareholder.

23 May 1990 T.I. (October 1990 Access Letter, ¶1447)

Where an employer establishes an in-house child care facility, defrays all operating expenses and makes the facility available to all employees gratuitously or for a minimal fee, the employee is not in receipt of a taxable benefit. An in-house facility includes leased premises.

25 April 1990 Memorandum (September 1990 Access Letter, ¶1405)

Tuition fees refunded by a school which had a continuing education program for its regular teachers who were required to obtain a diploma as a condition for the renewal of their employment contracts, constituted a taxable benefit in their hands.

7 March 1990 T.I. (August 1990 Access Letter, ¶1367)

Where an employee of a corporation is entitled to use a ski pass purchased by his employer, a taxable benefit will be deemed to have been drawn by the employee.

15 January 1990 T.I. (June 1990 Access Letter, ¶1255)

Discussion of when a benefit is conferred on a shareholder-manager by virtue of his participation in a universal life insurance policy.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 15 - Subsection 15(1) 21

15 January 1990 T.I. (June 1990 Access Letter, ¶1246)

Employer-provided parking is a benefit under s. 6(1)(a).

12 January 1990 T.I. (June 1990 Access Letter, ¶1247)

If an employer is involved in the administration of a wage loss plan, the plan will not be a Health and Welfare trust.

10 January 1990 T.I. (June 1990 Access Letter, ¶1262)

Detailed listing of various categories of expenses incurred in connection with a move which may be reimbursed by the employer without giving rise to a taxable benefit in the hands of the employee.

11 December 89 T.I. (May 1990 Access Letter, ¶1202)

Discussion of types of financial counselling that will qualify as being in respect of the retirement of an employee.

2 November 89 T.I. (April 90 Access Letter, ¶1191)

Reimbursements received by employee groups from the B.C. government for up to 1/2 of the costs of negotiating, evaluating and implementing an ESOP or an EVCP do not constitute an employee benefit. Following Ransom, such payment "puts nothing in the pocket but merely saves the pocket."

2 October 89 T.I. (March 1990 Access Letter, ¶1139)

No benefit arises where the employer establishes a child care facility and makes it available to all employees free of charge or for a minimal fee.

25 September 89 T.I. (February 1990 Access Letter, ¶1096)

The value of the benefit from free or low-cost day care services provided by an employer is calculated by dividing the operating costs of the services by the number of children benefitting from them, or through comparison with the market value of similar services provided by private businesses.

88 C.R. - "Automobile Rules" - "Employee Benefits"

The cost of employer-paid repairs resulting from an accident suffered by the employee is considered to form part of the total operating costs of the automobile for the purpose of calculating the operating cost benefit under s. 6(1)(a)(iii).

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 6 - Subsection 6(2.2) 17

88 C.R. - F.Q.27

Repair costs incurred by the employer to restore a vehicle which was damaged while the employee was travelling on business are viewed as replacing annual insurance premiums which otherwise would have been included in the total operating cost of the vehicle. Such repair costs must be included in the total operating costs of the automobile for benefit calculation purposes under s. 6(1)(a).

88 C.R. - F.Q.28

RC's policy to include the cost of repairs in the operating portion of the employee benefit calculation does not extend to the cost of a replacement vehicle where the previous company car must be written off due to a serious accident.

86 C.R. - Q.62

It is unlikely that RC would attempt to assess a benefit where a corporation guarantees a bank loan to a shareholder or employee, unless he is unable from the outset to repay.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 15 - Subsection 15(1) 79

86 C.R. - Q.77

The cost of insurance and repairs for accidents forms part of the operating cost for an employer-provided vehicle. When there is a fleet policy, the cost of the policy must be prorated over the fleet.

86 C.R. - Q.78

The benefit to an employee from having his tax return prepared is taxable.

ATR-8 (12 May 86)

"Self-insured health and welfare trust fund".

85 C.R. - Q.35

Frequent flyer points applied to personal travel are taxable.

84 C.R. - Q.92

Audit procedures re assessment of unreported tip income.

81 C.R. - Q.44

s. 6(1)(a) is applicable where financial counselling fees and fees for tax return preparation are paid by a corporation for the benefit of a shareholder-employee in his capacity as an employee.

80 C.R. - Q.46

Where an employee loan, previously made in order to enable him to acquire shares, is forgiven s. 6(1)(a) rather than s. 80 will apply. TR-91 will apply where the circumstances are identical to those described therein.

80 C.R. - Q.15

Where an employee is paid in gold coins having a value greater than their legal tender amount, their value is their amount for purposes of s. 6(1)(a).

Locations of other summaries Wordcount
Tax Topics - General Concepts - Fair Market Value - Shares 26

IT-85R2 "Health and Welfare Trusts for Employees"

IT-470R "Employees' Fringe Benefits"

IT-168R3 "Athletes and Players Employed by Football, Hockey and Similar Clubs"

Forms

Articles

Kevin Bianchini, Reuben Abitbol, "Taxation of Stock Appreciation Rights", Taxation of Executive Compensation and Retirement (Federated Press), Vol. 24 No. 8, 2015, p.1655

Safe harbour until SAR vesting (p. 1656)

[T]he CRA has taken the position that until the employee has a right to exercise and cash in the SARs, the SDA rules would not apply. [f.n…. 9422835 …]

In other words, once the SAR units become fully vested it would have be determined whether the executive is postponing the exercise of the SARs in order to avoid the immediate tax consequences (i.e., the employment income). As stated by the CRA, this is a question of fact… .

Alternative application of constructive receipt (“CR”) at time of vesting (p. 1657)

[I]n the context of the recognition of employment income, the Canadian jurisprudence has yet to develop guidance with respect to the doctrine of CR

…[T]he CRA addressed its position with respect to CR in the context of SDAs in… 1999-0007315… .

…As can be seen…the CRA adopts a very broad approach and leaves open the possibility that even if the SDA main purpose test is met, the rules with respect to the doctrine of CR may still be rendered applicable. Hence, in light of the above-mentioned, it seems likely that the SARs would be taxed at the moment they become fully vested regardless of when exercise occurs.

Gabrielle St-Hilaire, "When Free Parking is not Really Free", Canadian Current Tax, Vol 22, No. 10, July 2012, p. 1

Includes a discussion of "Kleinwächter's conundrum" (re a palace Flügeladjutant who detests opera and hunting).

Kim Brooks, "Delimiting the Concept of Income: The taxation of In-Kind Benefits", 2004 McGill Law Journal, Vol. 49, No. 2, p. 255.

Lyne Gaulin, "Tax-Free Compensation: An Overview of Non-Taxable Employment Benefits", Taxation of Executive Compensation and Retirement, Vol 10, No. 10, June 1999, p. 151.

Gold, "The Taxation of Health and Welfare Trusts in Canada", Taxation of Executive Compensation and Retirement, Vol. 8, No. 10, June 1997, p. 307.

Wolff, Leia, "To the Editor: Re: The Facts in Splane v. The Queen", 1995 Canadian Tax Journal, Vol. 43, No. 6, p. 2280.

Arnold, Li, "The Appropriate Tax Treatment of the Reimbursement of Moving Expenses", 1996 Canadian Tax Journal, Vol. 44, No. 1, p. 1.

Brown, Newton, "Tax Considerations in the Design of a Flexible Benefits Plan", Taxation of Executive Compensation and Retirement, Vol. 7, No. 2, September 1995, p. 22.

Lee, "Relocation Payments: The Continuing Search for the Tax-Free Zone", Taxation of Executive Compensation and Retirement, December/January 1995, p. 67.

Snider, "Employee Share Purchase Loans and the Predicament of Declining Share Values", 1993 Canadian Tax Journal, No. 5, p. 1001.

Dunbar, "Travel Expenses of Spouse May Not Give Rise to Taxable Benefit", Taxation of Executive Compensation and Retirement, November 1991, p. 526.

Bernstein, "Fringe Benefits and Equity Participation", 1991 Corporate Management Tax Conference Report, c. 5.

Baston, "Tax Planning for Executive Hiring and Firing", 1991 Corporate Management Tax Conference Report, c. 10.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 5 - Subsection 5(1) 6

MacKnight, "Indemnities for Officers and Directors - Adding Insult to Injury", Canadian Current Tax, August 1991, p. P41

Discussion whether directors' indemnity payments are an employment benefit.

Summerville, "Employee Discounts on Promotional Merchandise May Not be Taxable Benefit", Taxation of Executive Compensation and Retirement, October 1990, p. 349.

"Owner-Managers May Be Eligible for Tax-Free Reimbursement of Medical Expenses", Taxation of Executive Compensation and Retirement, June 1990, p. 299.

Dunbar, "Revenue Canada Sets Down the Ground Rules for Flexible Benefit Plans", Taxation of Executive Compensation and Retirement, May 1990, p. 278.

Summerville, "Tax Treatment of Parking Benefits May Be Contested", Taxation of Executive Compensation and Retirement, May 1990, p. 281.

Finley, "Revenue Canada Recognize Few Exceptions to Rule that Relocation Assistance is Taxable in Employee's Hands", Taxation of Executive Compensation and Retirement, February 1990.

Dionne, "Employers Who Waive Commissions on the Sale of Goods or Services May Confer Taxable Benefit on Employees", Taxation of Executive Compensation and Retirement, February 1990.

Finance

1996 A.P.F.F. Round Table No. 7M12910 (Item 4.3.1.): Critical commentary by Finance representative on the Splane and Hoefel cases, and a statement that Finance has not yet made a decision as to whether to seek an amendment to s. 6(1)(a).

Subparagraph 6(1)(a)(i)

Administrative Policy

14 September 2017 Roundtable, 2017-0703871C6 - CPA Alberta 2017 Q9: PHSP for owner-managers

sole employee-shareholder unlikely to qualify for PHSP

CRA considers that:

In a situation where a corporation provides a self-insured HCSA for its only employee who is also its sole shareholder … , it is likely that the sole employee-shareholder would be reimbursed for the full amount allocated to him or her annually.

On this basis, CRA would view the arrangement as not being a plan of insurance and, thus, not a private health services plan, so that there would be a taxable benefit to the employee-shareholder, even where the benefits were comparable to those available to non-shareholder employees performing similar services for similarly-sized businesses.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Private Health Services Plan a self-insured health care spending account (“HCSA”) for a sole employee-shareholder likely will not qualify as a private health services plan 281

11 January 2017 External T.I. 2016-0635351E5 - Employee-shareholder private health services plan

a qualifying PHSP could encompass the only two employees of a corporation who are the sole shareholder and spouse

A corporate employer pays private health services plan premiums (e.g., Blue Cross) under individual policies respecting its two employees (being all its employees): its sole shareholder; and a related individual. CRA stated:

CRA…generally accepts that medical and hospital insurance plans offered by Blue Cross are considered PHSPs….

After referring to its statement in S2-F3-C2 that the “general presumption that an employee-shareholder receives a benefit or an allowance in their capacity as a shareholder when the individual can significantly influence business policy” may not apply if “all of the employees are shareholders or individuals related to a shareholder, and the benefit or allowance is comparable (in nature and amount) to benefits and allowances generally offered to non-shareholder employees of similar-sized businesses, who perform similar services and have similar responsibilities,” CRA stated:

Where PHSP benefits (e.g., premiums paid by the employer) are received by virtue of employment, such amounts are excluded from employment income by subparagraph 6(1)(a)(i)…. [W]hen an employer makes a payment to an employee for PHSP premiums, the amount is only excluded from the employee’s income if the payment is a reimbursement.

If there were a taxable benefit, both the shareholder’s premiums and the spousal premiums would be included in the shareholder’s income under s. 15(1) or 56(2).

New position on private health services plans - Questions and answers 25 November 2015

The CRA now considers that a plan is a PHSP as long as all or substantially all of the premiums paid under the plan relate to medical expenses that are eligible for the medical expense tax credit (METC). The plan must also meet all other conditions…of…IT-339R2… . The CRA's old position was that all medical expenses covered under a plan had to be [so] eligible… . The new position came into effect January 1, 2015.

All or substantially all generally means 90% or more. Therefore, in most cases, 90% or more of the premiums paid under a plan have to be for coverage of medical expenses that are eligible for the METC.

For example, Company ABC pays $100 a month for its group employee insurance plan. … $70 relates to coverage for prescription drugs that an employee lawfully buys, as prescribed by a medical practitioner and recorded by a pharmacist;…$20 relates to coverage for dental services paid to a dentist;…$8 relates to coverage for medical tests such as electrocardiograms, urine analysis, and x-rays; and…$2 relates to coverage for non-prescription vitamins. Since the first three items are eligible for the METC and total more than 90% of the entire premium, the CRA would consider the plan to be a PHSP (assuming that all other conditions have been met).

24 November 2015 CTF Roundtable Q. 5, 2015-0610751C6 - PHSP update

substantially all test for PHSPs

Effective January 1, 2015, CRA has only been requiring that substantially all (rather than all) of the premiums paid under a private health services plan relate to medical expenses that are eligible for the medical expense tax credit. CRA "did not want plans to be considered offside on the basis of nominal or incidental non-METC coverage," and this change "provides more flexibility in designing plans to handle incidental or nominal non-METC expenses."

25 September 2014 External T.I. 2014-0528211E5 F - Cotisation payée par l'employeur

negotiated wage reduction in exchange for increased contributions to group sickness or accident insurance plan

A new collective agreement provides that the share of collective insurance premiums originally paid by the employees would be assumed by the employer in exchange for a wage reduction. Would CRA treat the premiums paid by the employer in such a situation as those of the employees? CRA responded:

[T]he tax consequences of a negotiated wage reduction in exchange for an increase in contributions to a group sickness or accident insurance plan under a labour contract will depend on the rights and obligations of the contracting parties under the new employment contract.

4 December 2013 External T.I. 2012-0465891E5 F - Primes d'assurance / Premiums

sub plan with only one employee of particular employer could be a group plan if benefits similar to those for employees in other sub plans

The employees of Corporation A were members of four basic insurance plans respecting health insurance, salary insurance and accidental death and dismemberment insurance available to employees of employers in a particular industry. Mr. A was the only member of Plan A as a result of also being a director (with other employees being members of Plans B, C or D). In addressing whether Plan AQ was a group insurance plan for purposes of s. 6(1)(a)(i), CRA stated:, CRA stated:

Where an organization establishes an insurance plan with an insurer for certain members of the organization, the insurance plan could be considered a group insurance plan if there are more than two members, even if the members are not employed by the same employer.

Furthermore, an employee can be considered to be covered by a group plan if the level of benefits and the ratio of contributions shared by the employer and employee are similar to those for other employees covered by the plan.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 15 - Subsection 15(1) insurance premium benefits qua shareholder 109

Subparagraph 6(1)(a)(iv)

Administrative Policy

S2-F3-C2 - Benefits and Allowances Received from Employment

Inclusion of substance abuse/exclusion of legal and financial counselling

2.47 ...Generally, the term counselling services refers to guidance and assistance provided by a trained person on a professional basis. This includes counselling services for tobacco, drug, or alcohol abuse, or for stress management.

2.48 The value of employer-paid legal and financial counselling services for an employee is generally not excluded...subparagraph 6(1)(a)(iv).

Example 12 – Personal trainer

An employer pays for the cost of a personal trainer for an employee. ...Some of these services qualify as counselling for the employee’s mental and physical health. Unless the value of any benefit received from such counselling services can be separated from the value of any benefits received from the other non-counselling services, subparagraph 6(1)(a)(iv) would not apply. ...

21 January 2016 Roundtable, 2016-0624811C6 F - Employee Assistance Program

restricted to advice, valued at hypothetical cost

Would the payment of premiums by an employer to an employee assistance program (providing support for issues such as stress, work difficulties, depression, marital problems, chemical dependencies, legal problems, diabetes and obesity) be a taxable benefit. After describing the exception for private health services plans, CRA referred to the exception in s. 6(1)(a)(iv) and stated (TI translation):

“[C]ounselling services” in subparagraph 6(1)(a)(iv)…are consulting or advisory services. The exception in subparagraph 6(1)(a)(iv) does not include a service that entails more than simply advice, or is preventive or curative treatment (as to which it would be necessary to examine any existing private health insurance plan and determine if these treatments occur under the plan). …

[T]he services of the employee assistance program that are counseling or advice respecting areas other than those specified in clauses (A) and (B) of subparagraph 6(1)(a)(iv), would not come within the exception provided by paragraph 6(1)(a)(iv). If these services were not principally for the main benefit of the employer and they were not provided under a private health services plan, such services would constitute a taxable benefit to the employee. Services provided in connection with difficulties at work could be an example of services principally for the benefit of the employer… .

The amount of any taxable benefit resulting from an employee assistance program which should be included in computing the income from an office or employment of the employee would be equal to the fair market value of the service, being the amount that an employee would have to pay for this service if the employee assistance program did not exist.

16 April 2014 External T.I. 2013-0514521E5 - Employer-paid Personal Trainer and Nutritionist

personal trainer/nutritionist not excluded as "counselling"

After finding that the employer-paid provision of the cost for a personal trainer or nutritionist for its employees generally would be considered to give rise to a taxable benefit, CRA stated

The Concise Canadian Oxford Dictionary defines "counselling" as "the act or process of giving counsel; the process of assisting and guiding clients, esp. by a trained person on a professional basis, to resolve esp. personal, social or psychological problems and difficulties." It is a question of fact whether any of the services provided by a personal trainer or nutritionist are counselling services.

Where counselling services are part of a program provided by a personal trainer or nutritionist, it is our view that the value of any benefit derived from such services would be difficult to separate from the value of any other benefits received or enjoyed under the program. Therefore, clause 6(1)(a)(iv)(A)…likely would not apply... .

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 6 - Subsection 6(1) - Paragraph 6(1)(a) personal trainer/nutritionist not excluded as "counselling" 164

24 October 2012 Internal T.I. 2012-0454661E5 F -

In respect to a query on financial planning services, CRA stated (TaxInterpretations translation):

...when counselling services are provided or paid by the employer, or reimbursed to the employee on the provision of receipts, respecting the re-employment of employees or their retirement, we are of the opinion that such amounts are not included in the calculation of the income of the employees.

Subparagraph 6(1)(a)(vi)

Administrative Policy

S2-F3-C2 - Benefits and Allowances Received from Employment

Education for family members

2.49 Subparagraph 6(1)(a)(vi) provides that any benefit an employee’s family member receives or enjoys under an educational program offered by an arm’s length employer is not included in the employee’s income. The benefit must not be a substitute for salary, wages, or other remuneration. This generally applies to free or reduced tuition provided to an employee’s family member to attend an elementary, secondary, or post-secondary school (private or public). The benefit is included in the family member’s income under subparagraph 56(1)(n)(i). The scholarship exemption in subsection 56(3) may exclude some or all of the benefit from the family member’s income.