Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.
Principal Issues: Free passes to its recreation facilities are provided by a city to its employees. However passes are not provided to firefighters who are paid an hourly rate when they respond to a call with respect to a fire or attend some fire drills. Some other individuals, who are volunteers (e.g., senior centre volunteers) and are not paid any remuneration, are also not provided with free passes. In relation to the CCRA's position in paragraph 33 of IT-470R, it is our general position that the facilities must be provided to all employees (see E 9916907)in order that the passes not give rise to taxable employment benefits. Do the free passes give rise to tax exempt benefits even though volunteers are not provided with them (or in the alternative the only volunteers provided with passes are firefighters)?
Position: Whether or not the volunteer firefighters are provided access to the city's recreational facilities while the unpaid volunteers are not, it is our view that such action will not, of itself, cause the comments in paragraph 33 of IT-470R not to apply.
Reasons: The CCRA accepts that the volunteer employees may be excluded.
February 16, 2001
XXXXXXXXXX Tax HEADQUARTERS Services Office M. Eisner, CA XXXXXXXXXX (613) 957-2138 Business Enquiries 2000-006131
Taxable Benefits - Recreational Facilities
This is in reply to your submissions made on December 12, 2000 and January 16, 2001 concerning the above-noted subject. We also acknowledge our telephone conversation on January 8.
Your enquiry relates to the XXXXXXXXXX (the "City") which has a population in excess of XXXXXXXXXX. The City issues passes to its employees for the free usage of the City's recreational facilities (e.g., golf courses, tennis, swimming pools). However, passes are not issued to volunteer firefighters who are paid an hourly rate when they respond to a call with respect to a fire or attend some fire drills. In addition, other individuals who are unpaid volunteers, are not provided with free passes.
You have asked if it is necessary for the City to issue passes to the unpaid volunteers if passes are issued to the volunteer firefighters, in order for the position in paragraph 33 of IT-470R (Consolidated) to apply.
Our Comments
With respect to the above situation, paragraph 6(1)(a) of the Income Tax Act (the "Act") generally requires an employee to include in income the value of any benefit received or enjoyed in respect of, in the course of or by virtue of employment. However, paragraph 33 of Interpretation Bulletin IT-470R "Employees' Fringe Benefits" sets out our position with respect to employer provided recreational facilities. This paragraph provides that, in order for the use of an employer's recreational facilities at nominal or no charge not be considered a taxable benefit in the hands of an employee, those same facilities must be available to employees generally. If certain groups or categories of employees are given the privilege of using employer recreational facilities at no/low cost for which other employees in the organization would be required to pay full price (as well as any other client of the organization), then we consider that a taxable benefit is being conferred on those employees that have been given the advantage.
In relation to the above comments, you have referred to a document issued by this Directorate (E 9916907), which indicates that in order for the benefit derived by an officer or employee from the use of employer-owned recreational facilities to be considered a non-taxable benefit, all employees generally must be provided access to those facilities. If the volunteer firefighters are provided access to the City's recreational facilities while the unpaid volunteers are not, it is our view that such action will not, of itself, cause the comments in paragraph 33 of IT-470R not to apply.
For your information, a copy of this memorandum will be severed using the Access to Information Act criteria and placed in the legislation Access Database (LAD) on the Agency's mainframe computer. A severed copy will also be distributed to the commercial tax publishers for inclusion in their databases. The severing process will remove all material that is not subject to disclosure including information that could disclose the identity of the taxpayer. Should your client request a copy of this memorandum, they can be provided with the LAD version or they may request a copy severed using the Privacy Act criteria which does not remove client identity. Requests for this latter version should be made by you to Jackie Page at (613) 957-0682. The severed copy will be sent to you for delivery to the client.
If you require technical assistance, we would be pleased to provide our views.
John Oulton, CA
for Director
Business and Partnerships Division
Income Tax Rulings Directorate
Policy and Legislation Branch
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