Principal Issues: Whether amounts paid by an employer for the travel of his employee’s spouse and children represent a taxable benefit in a situation where the employee must be absent for a long period of time as part of a professional development?
Position: None.
Reasons: Question of fact.
FEDERAL TAX ROUNDTABLE 5 OCTOBER 2018
2018 APFF CONFERENCE
Question 7
Benefit by virtue of an employment
Under certain employment agreements, university professors may on occasion be absent from their regular duties (for example, teaching, research) to engage in professional development. As part of this absence, the professors continue to have an employment relationship with the university as well as to earn a salary.
Where the professional development is abroad and is spread over several months, the university pays certain amounts relating to travel expenses (for example, plane tickets, accommodation) incurred by the professor in order to pursue the foreign professional development. The university also pays for the flight tickets of the spouse and the professor's children, if applicable.
Paragraph 6(1)(a) provides the general rules relating to taxable benefits. When travelling abroad, unless there is a business reason for the presence of a spouse, the amounts paid for the spouse's travel or lodging are generally a taxable benefit.
By virtue of subsection 6(6), certain amounts received by or enjoyed by an employee do not represent a taxable benefit if the conditions are satisfied. This subsection is intended to cover situations where an employee is temporarily employed at a special work site that causes the taxpayer to be absent for a period of at least 36 hours from the taxpayer’s place of residence.
Question to the CRA
Are the amounts paid for the travel of the spouse and children in a situation where the professor has to be absent for a long period of time in order to engage in professional development a taxable benefit?
CRA Response
The tax consequences to an employee of a specific payment made by the employer can only be determined in the light of all the facts, circumstances and relevant documents relating to a particular situation. Relevant documents include, among other things, the employment contract and the collective agreement.
The CRA can only make such a determination during an audit or as part of an advance ruling request.
Furthermore, given that the statement in this question only briefly describes a particular situation, the CRA is not in a position to provide general comments. Indeed, the CRA cannot establish in the present situation certain elements having a tax impact on a taxpayer. In particular, it should be determined whether the amounts paid are for the performance of the duties of an office or employment, whether they are a reimbursement or an allowance, and whether they are paid for travel or instead as moving expenses.
Isabelle Landry
(514) 496-9634
5 October 2018
2018-076878