Air Miles & Taxable Benefits

by Tax Guy - Burlington Accountant on January 16, 2009 Print This Post Print This Post

Question: If my company uses my credit card and I earn air miles on it is it a taxable benefit to me?

The Income Tax Act states that:

6. (1) There shall be included in computing the income of a taxpayer for a taxation year as income from an office or employment such of the following amounts as are applicable:

(a)      the value of board, lodging and other benefits of any kind

whatever received or enjoyed by him in the year in respect of, in the course of, or by virtue of an office or employment, except any benefit…

The CRA has released a bulletin on Employee Fringe Benefits that specifically states that when an employee accumulates frequent flyer points while travelling on employer-paid business trips and then uses them for personal benefit or the benefit of the employees family, then the value of the points are taxable.  The key point to consider is that if you use the points for personal use, then they become a taxable benefit.  If you use them for business, then they are not taxable.

Hope this helps.

Follow-up Question: My question was for frequent flyer points acquired through purchases made on our personal credit card by our company.  We make both company and personal purchases on our personal card.

Would the same principle apply if the purchases were made by the company and points were acquired?

If your company is a corporation and you are an employee then any business purchases on your credit card that are reimbursed by the business would be a taxable benefit, but only when redeemed for personal use.

If you are self-employed or operating as a sole proprietor and the points are used for the business would probably be non-taxable.  There does not appear to be anything in the act requiring a sole proprietor earning points and using them for personal expenses to include these amounts in income.  However, I would suggest that you request an advanced tax ruling from the CRA.

About The Tax Guy...

Dean Paley CGA CFP is a Burlington accountant and financial planner who services individuals and business owners locally, nationally and internationally. Dean has appeared in the National Post, Toronto Star and Metro News.

To find out more, visit Dean's website Dean Paley CGA CFP or connect via Twitter @DeanPaleyCGACFP.

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{ 2 comments }

Helen May 14, 2009 at 12:47 pm

What about if my employer is not giving me an option, like furnishing me a corporate CC or equivalent operational line of credit? …then is such tax liability my employer’s?

Tax Guy May 14, 2009 at 1:11 pm

If you receive a benefit from having the card (i.e. reward miles) then the miles used are a taxable benefit.

Note that no benefit is created unless you actually use the credit card rewards. You avoid the taxable benefit by not cashing in the rewards.

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