| 19(1) | File No. 5-8581 |
| J.D. Jones | |
| (613) 957-2104 |
October 19, 1989
Dear Sirs:
Re: Flexible Benefits Plan
This is in reply to your letter of August 24, 1989, wherein you requested our opinion on the implementation of a proposed flexible benefits plan of one of your clients.
As your enquiry involves a proposed transaction, it is more appropriately dealt with as an advance income tax ruling. Nevertheless, we are prepared to offer the following general comments concerning flexible benefit plans.
In our opinion, taxable benefits (such as salary, bonuses or the right to a salary increase) may not be converted to non-taxable benefits (such as an employer's contribution to a private health services plan). However, if a non-taxable benefit is offered to employees and some employees choose to forego this non-taxable benefit and instead receive a taxable benefit (such as cash), employees who receive the non-taxable benefit would not be subject to taxation in respect of that benefit and employees who receive cash would be taxed on such a receipt.
Yours truly,
for DirectorBusiness and General DivisionSpecialty Rulings DirectorateLegislative and IntergovernmentalAffairs Branch