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:
The Department accepts as a non-taxable privilege an employer-provided party or other social event, which is generally available to all employees, if the dollar amount per employee is reasonable in the circumstances. What is meant by “generally available to all employees”?
Position:
It is a question of fact whether an employer-provided party or event is “generally available to all employees” as this determination would depend on the particular situation. We would expect that the majority of employer-provided parties or events would be considered to be “generally available to all employees”. We would consider that an employer-provided party or social event is not generally available to all employees if it appears that the intent is to avoid the taxation of a benefit that would otherwise be taxed as remuneration. For example, if an employer pays for a vacation/personal trip for a few employees and these trips would otherwise be taxed as benefits in the employees’ hands under paragraph 6(1)(a) of the Act, we would not consider such trips to be an employer-provided social event that is generally available to all employees.
Reasons:.
Position taken in similar files
July 7, 1999
Lucie Miller HEADQUARTERS Research and Special Projects G. Moore Strategic Management, Research and Systems 952-1506 Human Resources Branch 200 Laurier Avenue West, 8th Floor 7-991700
Taxability of Employer-Provided Christmas Parties or Other Social Events
We are writing regarding the taxability of an employer-provided Christmas party or other social event. Further to the meeting (Moore/Miller) of June 18, 1999, you have asked that we clarify the Department’s position regarding the above-mentioned subject.
OUR COMMENTS
As you know, individuals are generally taxable on the value of all benefits they receive by virtue of their employment as paragraph 6(1)(a) of the Income Tax Act (the “Act”) requires an income inclusion for the value of any benefit “of any kind whatever” received or enjoyed by the taxpayer in the year in respect of an office or employment; however, there are certain exceptions. The Department accepts as a non-taxable privilege an employer-provided party or other social event, which is generally available to all employees, if the dollar amount per employee is reasonable in the circumstances. As a guideline, the intangible benefit from those events costing up to $100 per person will be considered to be non-taxable. Parties costing more than that are generally considered to be beyond the “privilege” point and may result in taxable benefits. Ancillary costs such as transportation home, may increase the amount considered reasonable.
You are asking that we clarify the meaning of “generally available to all employees”
XXXXXXXXXX It is a question of fact whether an employer-provided party or event is generally available to all employees as this determination would depend on the particular situation. However, in our view, we would expect that the majority of employer-provided parties or events would be considered to be generally available to all employees. These parties or events include Christmas parties, seasonal functions, picnics and other social gatherings.
We would consider that an employer-provided party or social event is not generally available to all employees if it appears that the intent is to avoid the taxation of a benefit that would otherwise be taxed as remuneration. For example, if an employer pays for a vacation/personal trip for a few employees and these trips would otherwise be taxed as benefits in the employees’ hands under paragraph 6(1)(a) of the Act, we would not consider such trips to be an employer-provided social event that is generally available to all employees.
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 Department'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 613 954-2898. The severed copy will be sent to you for delivery to the client.
R. Albert, C.A.
for Director
Business and Publications Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch