Cases
Anthony v. The Queen, 2010 DTC 1356 [at 4392], 2010 TCC 533, 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).
The Queen 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. The Queen, 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.
Attorney General of Canada 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. Attorney General of Canada, 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. The Queen, 2004 DTC 6407, 2004 FCA 189
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.
Dhillon v. The Queen, 2002 DTC 2083, Docket: 2000-4087-IT-G (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. The Queen, 2000 DTC 6685, Docket: A-611-98 (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. The Queen, 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. The Queen, 99 DTC 5279, Docket: A-524-97 (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."
The Queen v. Lao, 97 DTC 5498, Docket: A-361-93 (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".
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."
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".
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.
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.
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)
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. MNR, 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)
"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
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
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
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
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 and Johannsson v. The Queen, 2009 DTC 205, 2008 TCC 681, 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
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'."
Bilodeau v. The Queen, 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."
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
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, 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, Docket: 2001-3099-IT-I (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, Docket: 98-2788-GST-G (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, Docket: 97-3845-GST-G (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, Docket: 97-10-IT-G (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, Docket: 97-1768-IT-I (TCC)
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, Docket: 94-3219-IT-G (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)
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)
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)
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."
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.
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).
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".
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)
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".
Abbott v. Philbin, [1960] 2 All E.R. 763 (HL)
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.
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
2014 Ruling 2013-0514561R3 - Payment in lieu of continued PHSP coverage
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.
24 July 2015 Folio S2-F1-C1
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 T.I. 2012-0457981E5 - Restorative payment to registered plan
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.
6 November 2014 T.I. 2014-0528521E5 F - Payment of management fees by employer
The payment of the reasonable expenses of a DPSP, such as management fees and brokerage, by the employer will not give rise to a taxable benefit. However, the payment of such expenses of an RRSP or TFSA generally will give rise to a taxable benefit to the employees who are beneficiaries under the plans.
8 December 2014 Folio S3-F9-C1
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 T.I. 2013-0495091E5 - Reimbursement of employee's foreign tax
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… .
16 April 2014 T.I. 2013-0514521E5 - Employer-paid Personal Trainer and Nutritionist
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... .
10 April 2014 T.I. 2013-0514321E5 - Donated vacation
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)… .
18 December 2013 Memorandum 2012-0472211I7 F - Voyages offerts par une compagnie
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]hen 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 exists a presumption to the effect that the person benefited qua 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 qua 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 Taxapyer must...include the value of the benefit included in the computation of income by vitrtue 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."
19 February 2014 T.I. 2013-0508501E5 - Taxable benefit - medical test
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 T.I. 2013-0501351E5 - Employee award
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 T.I. 2013-0490621E5 - Taxation of gift from parent to teacher
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 T.I. 2013-0496251E5 - Workers compensation payments
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 T.I. 2013-0494891E5 - Taxability Scholarship Funds Received by Employees
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 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 Memorandum 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 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 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 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 T.I. 2011-0431681E5 -
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 T.I. 2011-0430971E5
Groceries are considered "merchandise" for purposes of para. 2 of IT-470R (respecting employeee discount programs).
29 November 2011 CTF Roundtable Q. , 2011-0425801C6
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 Q. , 2013-0479111C6
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 Memorandum 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 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 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 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 Memorandum 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 T.I. 5-982754
Discussion of RC's position that employer-provided free parking gives rise to a taxable benefit.
15 July 1998 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:
- 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;
- no principal is subsidized; and
- 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 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.
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).
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.
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).
IT-85R2 "Health and Welfare Trusts for Employees"
IT-75R3 "Scholarships, Fellowships, Bursaries, Prizes, and Research Grants".
IT-63R5 "Benefits, Including Stand-By Charge for an Automobile, from the Personal Use of a Motor Vehicle Supplied by an Employer - after 1992"
No benefit for parking is imputed for parking costs related to business travel.
IT-470R "Employees' Fringe Benefits"
IT-168R3 "Athletes and Players Employed by Football, Hockey and Similar Clubs"
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.
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
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 Annual Roundtable, Q.5
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."
Subparagraph 6(1)(a)(iv)
Administrative Policy
16 April 2014 T.I. 2013-0514521E5 - Employer-paid Personal Trainer and Nutritionist
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... .
24 October 2012 Memorandum 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.
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," ([pin type="node_head" href="162-Schroter"]Schroter[/pin], 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) ([pin type="node_head" href="162-Schroter"]Schroter[/pin], following [pin type="node_head" href="162-Lowe"]Lowe[/pin]). Accordingly, an expense which is incurred by an employer primarily for its benefit likely is not a benefit to the employee ([pin type="node_head" href="162-Dhillon"]Dhillon[/pin]), perhaps even in circumstances where this gives rise to a material acquisition of something of value to the employee ([pin type="node_head" href="162-Rachfalowski"]Rachfalowski[/pin]). 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 ([pin type="node_head" href="162-Lowe"]Lowe[/pin]). 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 ([pin type="node_head" href="162-Hoefele"]Hoefele[/pin], [pin type="node_head" href="162-Splane"]Splane[/pin], [pin type="node_head" href="162-Douglas"]Douglas[/pin], [pin type="node_head" href="162-Zaugg"]Zaugg[/pin], cf. [pin type="node_head" href="162-Pezzelato"]Pezzelato[/pin], see also [pin type="node_head" href="162-McNeill"]McNeill[/pin]). In one case, the provision of an interest-free loan in connection with an employee relocation also did not give rise to a benefit ([pin type="node_head" href="162-Siwik"]Siwik[/pin]). Other examples are reimbursement for the costs of non-civilian clothing ([pin type="node_head" href="162-Huffman"]Huffman[/pin]), the provision of a pickup truck that is used for the performance of duties of employment rather than commuting to work ([pin type="node_head" href="162-Anderson"]Anderson[/pin]), the receipt of lodging and meals in the course of an intensive training program ([pin type="node_head" href="162-Dhillon"]Dhillon[/pin]) or the reimbursement of additional meal expenses incurred as a result of working overtime ([pin type="node_head" href="162-Confederation"]Confederation des Caisses Populaires[/pin]). 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 ([pin type="node_head" href="162-Clemiss"]Clemiss[/pin], [pin type="node_head" href="162-Savard"]Savard[/pin], [pin type="node_head" href="162-Bilodeau"]Bilodeau[/pin], see also [pin type="node_head" href="162-Pellizzari"]Pellizari[/pin]). 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 ([pin type="node_head" href="162-Adler"]Adler[/pin], [pin type="node_head" href="162-Chow"]Chow[/pin], [pin type="node_head" href="162-Saskatchewan"]Saskatchewan Telecommunications[/pin], [pin type="node_head" href="162-Anthony"]Anthony[/pin], [pin type="node_head" href="162-Johannsson"]Johannsson[/pin]). 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 ([pin type="node_head" href="162-Lowe"]Lowe[/pin], [pin type="node_head" href="162-Phillips"]Philp[/pin], [pin type="node_head" href="162-Hart"]Hart[/pin], see also [pin type="node_head" href="162-Stevens"]Stevens[/pin]).
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 ([pin type="node_head" href="162-McGoldrick"]McGoldrick[/pin]), 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 ([pin type="node_head" href="162-Desrosiers"]Derosiers[/pin], [pin type="node_head" href="162-Lao"]Lao[/pin], [pin type="node_head" href="162-Phillips"]Phillips[/pin]), where a minimum resale price for an employee home is guaranteed (or the right of the employee to this guarantee is bought out - [pin type="node_head" href="162-Blanchard"]Blanchard[/pin]), where an employer-subsidized course results in the employee obtaining a professional designation ([pin type="node_head" href="162-Jex"]Jex[/pin]), or where the employee receives free hotel accommodation after the Christmas party ([pin type="node_head" href="162-Dunlap"]Dunlap[/pin]). 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 ([pin type="node_head" href="162-Guay"]Guay[/pin], [pin type="node_head" href="162-Dionne"]Dionne[/pin], [pin type="node_head" href="162-Suffolk"]Suffolk[/pin]). 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 ([pin type="node_head" href="162-Killinger"]Killinger[/pin]) or for the higher tax rate on Canadian-source employment income ([pin type="node_head" href="162-Gernhart"]Gernhart[/pin]).
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 ([pin type="node_head" href="162-Pezzelato"]Pezzelato[/pin]).
Meaning of "enjoy" and "board"
Bowman C.J. stated that "enjoy" means to "have the use of or benefit of" ([pin type="node_head" href="162-Rachfalowski"]Rachfalowski[/pin]).
It was found in a British context that the provision of a continental breakfast was "board" ([pin type="node_head" href="162-Otter"]Otter v. Norman[/pin]).
Timing of recognition of benefit
A benefit is received when there is a transfer of valuable property to the employee. Accordingly, the [pin type="node_head" href="162-Henley"]Henley[/pin] 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 [pin type="node_head" href="162-Abbott"]Abbott v. Philbin[/pin]). The earlier decision in [pin type="node_head" href="162-Robertson"]Robertson[/pin] (followed in [pin type="node_head" href="162-Markin"]Markin[/pin]) 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 [pin type="node_head" href="162-Robertson"]Robertson[/pin] case, options to acquire shares of a third party did not vest until the employee had worked for specified periods of time.)
Similarly, in [pin type="node_head" href="162-Hogg"]Hogg[/pin] 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 ([pin type="node_head" href="162-Savage"]Savage[/pin], effectively overruling [pin type="node_head" href="162-Phaneuf"]Phaneuf[/pin], see also [pin type="node_head" href="162-Cooke"]Cooke[/pin]).
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 [pin type="node_head" href="162-Phillips"]Phillips[/pin]), or the provision and then forgiveness of a loan by his employer's customer ([pin type="node_head" href="162-Norris"]Norris[/pin]). 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 ([pin type="node_head" href="71-Baptist"]Baptist[/pin], cf. [pin type="node_head" href="162-Gordon"]Gordon[/pin]). 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 ([pin type="node_head" href="162-Heggie"]Heggie[/pin]). Kickbacks received, for example, by a corrupt purchasing agent will be taxable benefits even though the employer presumably has no knowledge of these receipts ([pin type="node_head" href="162-Robson"]Robson[/pin], [pin type="node_head" href="162-Poynton"]Poynton[/pin], see also [pin type="node_head" href="162-Goldman"]Goldman[/pin]).
"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 [pin type="page" href="259"]s. 6(1)(b)[/pin] ([pin type="node_head" href="162-Dhillon"]Dhillon[/pin]).
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." ([pin type="node_head" href="162-Armstrong"]Armstrong v. Redford[/pin].)
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., [pin type="node_head" href="162-Stevens"]Stevens[/pin]), it is now established that a benefit from employment is generally to be valued at its fair market value where this is determinable ([pin type="node_head" href="162-Spence"]Spence[/pin], applying [pin type="node_head" href="162-Schroter"]Schroter[/pin]). 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 ([pin type="node_head" href="162-Anthony"]Anthony[/pin]).
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 ([pin type="node_head" href="162-Schutz"]Schutz[/pin]). 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 ([pin type="node_head" href="162-Mommersteeg"]Mommersteeg[/pin]).
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 ([pin type="node_head" href="162-McIlhirgey"]McIlhirgey[/pin], [pin type="node_head" href="162-Bolton"]Bolton[/pin], [pin type="node_head" href="162-Norris"]Norris[/pin]).