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The "Eqivalent to Spouse" Credit

Before 2009, the CRA took the view that loyalty points such as frequent flyer points collected by employees when they charged their employment-related travel expenses on their personal credits cards (and that were then reimbursed by their employers) were taxable benefits. However, since 2009, the CRA has modified its administrative position, and generally allows such points to be earned tax-free.

In particular, the CRA's position is that frequent-flyer or similar loyalty points are not taxable if the points are collected using the employee's personal credit card. However, this applies only if the points are not converted to cash, the plan or arrangement is not indicative of an alternate form of remuneration, and the plan or arrangement is not for tax avoidance purposes.

Furthermore, if the employer controls the points – for example, where a company credit card is used to charge the expenses and the employer allows the employee to redeem some of its points – the CRA states that a taxable benefit will continue to apply and the fair market value must be reported on the employee's T4 slip. The CRA provides the following example:

Example – Company credit card points as benefit to the employee

Jennifer's employer has a company credit card, under which loyalty points are earned. The employer is billed and pays the credit card charges. The employer allows Jennifer to redeem the points for her personal use. In such circumstances, the fair market value of the goods or services received by Jennifer will represent a taxable employment benefit. In this case, the employer must include and report the value of the benefit on the employee's T4 slip.

Last Updated ( Sunday, 18 September 2011 09:44 )