It seems like every credit card available today has some kind of fringe benefit. Whether it is frequent flyer points, points towards purchases or cash back, a credit card is no longer just a way to defer payment.
After accruing frequent flyer miles while travelling on company business, employees may occasionally cash in their points for vacations, or other merchandise. In the eyes of Canada Revenue Agency (CRA), employees were supposed to calculate the resulting benefit of these points and include it as income on their personal tax return!
However, the CRA has now introduced new guidelines around claiming frequent flyer miles on a personal tax return. Employees don't have to report them if:
• The points are not converted to cash
• The plan or arrangement is not an alternate form of compensation as part of your job
• The plan or arrangement is not designed to avoid paying tax
These rules apply when the employee controls the points. If the points are controlled by an employer, and given to the employee in a situation such as a bonus, employers must continue to report the fair market value of any benefits received by the employee on their T4 slip when the points are redeemed.
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