Example 1

Personal credit card - Taxable benefit

Pauline's employer allows her to use her personal credit cards whenever possible to pay for business expenses, which the employer then reimburses to her. To maximize the points earned, Pauline used her personal credit cards to pay for various employer business costs, including travel expenses of other employees.

We view this arrangement as a form of additional remuneration provided to Pauline. Pauline would not normally pay for employer business costs other than her own work-related expenses, incurred in the normal course of working. She would not normally cover the cost of business expenses of other employees. Pauline will have to calculate the fair market value of any personal reward she receives when she redeems the points. She will then have to declare the value as income on her income tax and benefit return.

Example 2

Company credit card points for benefit of the employee

Jennifer's employer has a company credit card, under which loyalty points are earned. Jennifer uses the card for employment-related purchases. The employer is billed, pays the credit card charges, and receives the loyalty point statement. The employer allows Jennifer to redeem the points for personal rewards. In this case, the fair market value of the goods or services received by Jennifer is a taxable employment benefit, as her employer controls the tracking and disbursement of the points. The employer has to report the value of the goods or services on her T4 slip in the year that the points are redeemed.

Alternately, if the employer did not control the tracking and redemption of the points, the value of any points redeemed by Jennifer for personal rewards would not have to be included on her T4 slip. Jennifer may have to declare the income on her income tax and benefit return.

Example 3

Personal loyalty points card - Non-taxable

Frank has a personal credit card he uses for both personal and work-related expenses. The card offers loyalty points which can be cashed in for travel rewards, but which cannot be redeemed for cash. Frank decides to redeem some of the points to take his family on vacation.

Since Frank controls the points, and this arrangement does not seem to be a form of additional remuneration, he does not have to include the value of the points earned from work-related expenses as income on his income tax and benefit return.