23 April 2001 External T.I. 2001-0073315 - REIMBURSE. OF TRAVEL EXPENSES

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: The income tax consequences when: (i) An employee is reimbursed for the cost of his or her meals incurred while travelling on business; and (ii) An employee is reimbursed for the cost of in-room movies, which is shown as a separate charge on the hotel bill, while travelling on business.

Position: Our general position is that a "reimbursement" for travel expenses is not income in the hands of the employee receiving it, unless it represents payment of the employee's personal expenses (which is a question of fact).

Reasons: Para. 51 of IT-522R

XXXXXXXXXX 	J. Gibbons, CGA
		2001-007331
April 23, 2001

Dear XXXXXXXXXX:

Your facsimile to the Windsor Tax Services Office, dated February 26, 2001, was forwarded to us for reply. In your facsimile, you requested our views on the following situations:

1. An employee is reimbursed for the cost of his or her meals incurred while travelling on business for XXXXXXXXXX (the "Company"). The employee does not stay overnight.

2. An employee is reimbursed for the cost of in-room movies, which is shown as a separate charge on the hotel bill, while travelling on Company business.

As requested, we have considered the situations outlined in your letter and have provided some comments below. However, we cannot confirm the tax implications of particular transactions unless the transactions are proposed and are the subject matter of an advance ruling request submitted in the manner set out in Information Circular 70-6R4. Thus, our comments are of a general nature only.

Our comments

Our general position on the reimbursement of employee travel expenses by an employer is set out in paragraph 51 of IT-522R, "Vehicle, Travel and Sales Expenses of Employees." (You can obtain a copy of this publication, as well as other Canada Customs and Revenue Agency (CCRA) publications, from our website at www.ccra-adrc.gc.ca.) This paragraph indicates that, usually, a "reimbursement" for travel expenses is not income in the hands of the employee receiving it, unless it represents payment of the employee's personal expenses. It is a question of fact in each case whether an expense is a personal expense or an employment expense. Accordingly, if you wish to obtain CCRA's views with respect to a particular expense, you would have to submit the full details relating to the expense to your local tax services office for their review.

In your facsimile, you refer to a "gross-up tax adder," which we understand to be an additional amount given to the employee to compensate him or her for the resulting income taxes when a reimbursement is considered to be a taxable employment benefit. In our view, the amount of the gross-up adder would have to be included in employment income.

We trust that these comments will be of assistance.

Yours truly,

John Oulton, CA
for Director
Business and Partnerships Division
Income Tax Rulings Directorate

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