N.M. Sheerin 957-2135
Attention: Superintendent A.D.F. Burchill
MAR 5 1988
Dear Sirs:
This is in reply to your further letter of January 20, 1988, concerning the taxability of the Plainclothes Allowance paid to certain members of the R.C.M. Police who, by virtue of their assigned duties, are precluded from wearing uniforms while performing the duties of their employment. In our previous letter to you dated July 24, 1985, we confirmed that such allowances are taxable.
You indicate that Treasury Board has recently approved revised, separate Plainclothes Allowances for male and female members of the Force, i.e. $780 annually for male members and $1,288 annually for female members. You point out that the amount of the allowance was determined on the basis of a new methodology, using such factors as clothing item cost, wear life expectancy and percentage of time worn while on duty. Given the revised methodology, it is your contention that the allowance should be treated as a non-taxable benefit.
We again confirm that allowances paid by an employer to an employee for the purchase of ordinary clothing are taxable under paragraph 6(1)(b) of the Income Tax Act. Similar amounts paid to employees on a reimbursement basis are also taxable. In spite of the revision to the methodology employed to calculate the amount of the allowance, the fact remains that the cost of clothing is a personal expense, and consequently any contributions by the R.C.M. Police to offset such costs would constitute a taxable benefit to the employee.
We might mention that the Court decision discussed in our previous letter, John E. Shoveller v. The Minister of National Revenue, 84 DTC 1195, was overruled in the Federal Court, Trial Division on November 17, 1986. The Department's position concerning the reimbursement of certain clothing expenses of a plainclothes police officer has therefore been affirmed.
We trust these comments will be of assistance to you.
Yours truly,
ORIGINAL SIGNED SY
ROBERT H. JOYCE for Director Small Business and General Division Specialty Rulings Directorate Legislative and Intergovernmental Affairs Branch