ET/SL 26

August 1, 1995

In response to requests from the airline industry, the Excise Duties and Taxes Directorate has clarified the Department's position on the application of Air Transportation Tax (ATT) on employee travel within the taxation area. This notice supersedes Excise Taxes and Special Levies Notice # 019 on the same topic, issued on October 13, 1994.

ATT is imposed on each amount payable or paid, for transportation of a person by air where the air journey begins and ends at a point in the taxation area. This tax is also applicable where the air journey begins in the taxation area and ends outside the taxation area and includes an emplanement in Canada. The taxation area includes Canada, the United States (except Hawaii), and the islands of St. Pierre and Miquelon.

It is our understanding that employees of air carriers are entitled to various benefits from their employers, such as discounted air travel. Effective October 1, 1995, where an amount is paid or payable by an employee for discounted air travel, ATT must be charged on such amounts. This would include amounts that are paid or payable by way of employee deductions or in the form of "service charges" or "administration fees". ATT does not apply when an amount is paid or payable for international air travel and such amount is 90% or more below the maximum amount that can be charged for a particular class of air travel.

If you require further explanation concerning the application of ATT to employee travel, please contact your local Revenue Canada Tax Services office.