6 October 1997 Internal T.I. 9718627 - EMPLOYMENT INCOME

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.

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:

Are voluntary payments made by an employer to an employee taxable in the hands of the employee.

Position:

Yes, the payments would be considered employment income pursuant to subsection 5(1) or paragraph 6(1)(a) of the Act.

Reasons:

			October 6, 1997

	VANCOUVER TAX SERVICES OFFICE	HEADQUARTERS
	Client Services	Financial Industries
	471-24                              		  Division
M. P. Baldwin
	Attention:  E. Stafanucci
			971862

Income Tax Return for XXXXXXXXXX

This is in reply to facsimile of July 10, 1997 in which you request our assistance in determining whether or not certain receipts by an individual taxpayer are considered to be taxable income.

As this enquiry relates to a completed transaction we can not reply to the taxpayer as originally requested and are therefore returning the information sent to us for your action to reply to the taxpayer. Although we cannot reply to the taxpayer directly, we have reviewed the limited information sent to us and based on this limited information we have the following comments.

Our understanding of the facts in this case are:

XXXXXXXXXX

Based on the limited facts in the facsimile, we are assuming that the payments made by the employer to XXXXXXXXXX are gratuitous payments and are not pursuant to the settlement of a lawsuit.

As a general rule, gifts in cash or in kind or financial assistance that an employer gives directly or indirectly to employees are taxable benefits that employees receive in the course of their employment. As noted in paragraph 4 of IT-334R2 "Amounts received as gifts, that is, voluntary transfers of real or personal property without consideration, are not subject to tax in the hands of the recipient. However, when by virtue of an office or employment a voluntary payment or other valuable transfer or benefit is received by an employee from an employer, or from some other person, the amount of the payment or the value of the transfer or benefit is generally included in income pursuant to subsection 5(1) or paragraph 6(1)(a)."

Based on the facts as noted above, in our opinion the voluntary payments are made by virtue of an office or employment of XXXXXXXXXX and consequently these payments would be considered employment income and included in XXXXXXXXXX income pursuant to subsection 5(1) or paragraph 6(1)(a) of the Income Tax Act.

for Director
Financial Industries Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch