A taxpayer's administrative policy regarding the air travel of its executives and directors in the performance of their duties is that air travel is limited to economy class, except for flights of 4 hours or more, where a business class ticket is reimbursable. However, instead of reimbursing the traveller for a business class ticket, the taxpayer will reimburse the employee for the cost of two economy class tickets for the employee and spouse, to the extent that the price paid for the two tickets does not exceed the price of a business class ticket. CRA stated:
The taxpayer's administrative policy for all officers and directors to reimburse the cost of a business class airline ticket in certain circumstances primarily benefits the employer. … [B]usiness class air travel may allow the employer to get better performance from the employee. Consequently … the reimbursement … does not constitute a taxable benefit … .
… [T]he reimbursement of the spouse's ticket is made primarily for the benefit of the employee and … the latter derives an economic advantage from it. That advantage results precisely from the fact that the executive obtains a free ticket for the executive’s spouse. Thus … the reimbursement … is a benefit to be included in the employee's income under paragraph 6(1)(a).