ET/SL 19

October 31, 1994

In response to requests from the airline industry, the Excise Duties and Taxes Directorate has clarified the Department's position on the application of Air Transportation Tax (ATT) with respect to employee travel as follows:

ATT is imposed on each amount payable or paid, for transportation of a person by air where the air journey begins and ends at a point in the taxation area. This tax is also applicable where the air journey begins in the taxation area and ends outside the taxation area and includes an emplanement in Canada. The taxation area includes Canada, the United States (except Hawaii), and the islands of St. Pierre and Miquelon.

It is our understanding that employees of air carriers are entitled to various benefits from their employers, such as discounted air travel. We would like to confirm that it has always been the Department's position that where an amount is paid or payable by an employee for discounted air travel, ATT must be charged on such amounts. This would include amounts that are paid or payable by way of employee deductions or in the form of "service charges" or "administration fees". ATT does not apply when an amount is paid or payable for international air travel and such amount is 90% or more below the maximum amount that can be charged for a particular class air travel.

If you require further explanation regarding your specific program, please do not hesitate to contact your local district office.

Sincerely,

Keith Hudson
Acting Director
Excise Taxes and Special Levies
Excise Taxes and Duties