Principal Issues: Would employer-provided pet insurance result in a taxable benefit.
Position: Yes.
Reasons: These would normally represent personal or living expenses.
XXXXXXXXXX 2009-035039 Michael Cooke, C.A. March 16, 2010
Dear XXXXXXXXXX :
Re: Self-insured pet care for Employees
This is in reply to your correspondence of December 3, 2009, wherein you requested our views on whether an employer-provided self-insured plan that would cover the cost of veterinary care provided to pets owned by employees would be taxable.
Our Comments:
Written confirmation of the tax implications inherent in particular transactions is given by this Directorate only where the transactions are proposed and are the subject matter of a request for an advance income tax ruling submitted in the manner set out in Information Circular 70-6R5, Advanced Income Tax Rulings, dated May 17, 2002. This Information Circular and other Canada Revenue Agency ("CRA") publications can be accessed on the internet at http://www.cra-arc.gc.ca. Where the particular transactions are complete, the inquiry should be addressed to the relevant tax services office, a list of which is available on the "Contact Us" page of the CRA website. Although we cannot comment on your specific situation, we are prepared to provide the following comments in respect of the issues that you raised. Please note, however, that these comments are of a general nature only and are not binding on the CRA.
Pursuant to paragraph 6(1)(a) of the under the Income Tax Act ("Act"), benefits received or enjoyed by an employee in respect of, in the course of, or by virtue of an office or employment are generally taxable as income from that office or employment unless specifically excluded. Further, pursuant to paragraph 6(1)(b) of the Act, all amounts received by an employee as benefits received or enjoyed for "personal and living expenses" are taxable, subject to certain listed exceptions, none of which apply in this particular situation. Accordingly, it is our view that the payment or reimbursement of an employee's veterinary costs would result in a taxable benefit to the employee as these types of expenses would generally be considered as personal or living expenses.
We trust our comments will be of assistance to you.
Yours truly,
Renée Shields
for Director
Business and Partnerships Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch