| January 12, 1990 | |
| Halifax District Office | Specialty Rulings |
| Directorate | |
| H.K. Kingston | J.A. Szeszycki |
| Chief of Audit | (613) 957-2103 |
| File No. 5-9237 |
Subject: 24(1)
We have been in correspondence with the firm of 19(1) and 19(1) Following their request for an advance ruling and opinion with respect to the payment or reimbursement of certain legal expenses incurred by 19(1) The exchange of correspondence is enclosed.
As you will note from our response to their initial request for an advance ruling/opinion we declined to provide the requested opinion as the information submitted was insufficient to determine whether the payment of 19(1) legal fees 24(1) constitutes a taxable benefit to 19(1) in a telephone conversation with 19(1) held prior to forwarding that response we indicated that the additional information, if they choose to release it, should be sent to the District Office. The subsequent submission, however, was forwarded to us.
With respect to the issue at hand, we are still uncertain whether the additional information is sufficient to make an accurate determination. Although we leave the final determination in your hands, we are providing the following comments for your consideration.
It would appear from the facts of the case that the payment of an individual employees legal fees is based on the indemnification described in of the 24(1) cases, we view that no real benefit is received by the employee in respect of the legal costs incurred by him that are paid by the employer. An exception to that view would occur if the employee derived some measurable benefit for himself from the acts or things done by him, which subsequently led to the accrual of legal fees.
If we can be of any further assistance in the matter please contact Jack Szeszycki of this division at (613) 957-2103.
for DirectorBusiness and General DivisionSpecialty Rulings DirectorateLegislative and Intergovernmental Affairs Branch
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