16 March 1999 Ministerial Letter 9901848 - XXXXXXXXXX

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: Taxation of XXXXXXXXXX from employers

Position: Taxable benefit

Reasons: 6(1)(a)

XXXXXXXXXX

Dear XXXXXXXXXX:

The Honourable Herb Dhaliwal, Minister of National Revenue,
has asked me to reply to your correspondence of January 8, 1999, to the
Right Honourable Jean Chrétien, Prime Minister of Canada, concerning the
taxation of XXXXXXXXXX

While I cannot comment on issues relating to a particular taxpayer, I would like to point out that the practices concerning taxation of employer-provided gifts has been in existence since 1981. When an employer gives a gift, in cash or in kind, to its employees, the value of the gift is included in employment income under the Income Tax Act. This applies to all employers and there are no special rules applicable to employers involved in professional sports.

An employer can give a gift valued at $100 or less without resulting in a taxable benefit to an employee, provided that the employer does not claim the cost of the gift as an expense. The practice generally allows one gift per employee each year for Christmas or a similar occasion. The treatment of other gifts is explained in paragraph 9 of Interpretation Bulletin IT-470R, Employees’ Fringe Benefits, a copy of which is enclosed for your convenience. The reference to the words “in kind” in the Bulletin should be interpreted to include merchandise or any non-cash item provided by the employer. When an employee is rewarded by an employer with merchandise or other non-cash item, the fair market value of the award must be included in the employee’s income.

I trust this explains the Department’s position on this matter.

		Yours sincerely,

		Bill McCloskey
		Assistant Deputy Minister
		Policy and Legislation Branch

Attachment

D. Duff
957-2058
February 22, 1999
990184

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