a. “Incentive” Trips (S2-F3-C2, para. 2.25)
Would CRA amend S2-F3-C2, para. 2.25 (“However, where an employee receives a trip as an employment incentive or award and is not engaged in employment/business activities during a substantial part of each day of the trip, the employee is the primary beneficiary….”) to account for trips that may be viewed by employees as “incentives” but serve a primary business purpose for the employer? CRA responded:
Paragraph 2.25 does recognize that employment-related activities may be part of an incentive or award trip. The last sentence of paragraph 2.25 states “If the employee is required to perform employment duties during that trip, any benefit included in the employee’s income may be reduced for any actual employment-related activity.” In your example, if a sales team is awarded a trip for achieving a set target and they are required to perform employment duties while on the trip, then the benefit may be reduced to the extent of the employment-related activities.
b. Detailed receipts (S2-F3-C2, para. 2.16)
Could CRA amend S2-F3-C2, para. 2.16 to reflect that “detailed receipts” are not always required? CRA responded:
The definition of reimbursement is consistent with Verdun…, which states “Even when these amounts are…reasonable estimations of the costs…[they are] additional remuneration, not…reimbursement of expenses, which require detailed receipts….”
In most cases, the best evidence to show how much was spent is the actual receipt (for example, an invoice). …
c. Third-party benefit reporting
Could CRA amend S2-F3-C2, paras. 2.27-2.28 to clarify which party has the reporting responsibility for third-party benefits – and would CRA consider extending the same $500 reporting threshold for non-cash gifts to benefits received from third parties? CRA responded:
…We will consider adding a link to RC4157 to paragraph 2.69.
The $500 reporting threshold that exists for non-cash gifts and awards received from an employer will not be extended to benefits received from third parties. However…[i]f the amount of the payment is $500 or less, CRA generally waives the T4A reporting requirement unless income tax was withheld at source…[or in the case of] group term life insurance benefits.
d. FMV benefit valuation
Could CRA amend S2-F3-C2, para. 2.26 to include the statement in 2010-0377261E5 that “Where the fair market value cannot be determined with any degree of certainty, it may be reasonable to consider the employer’s cost as a measure of the benefit.” CRA responded:
Paragraph 2.26 will be revised to better reflect Spence… [where t]he FCA… noted that “costs of the benefit to the employer is the wrong instrument to assess the value of the benefit. …”