June 02, 2010
Can Canadian employer in disaster provide financial assistance to employee extended family abroad?
Published under: Canadian Charity Law
The CRA recently discussed “Whether in the particular circumstances, financial assistance provided by an employer to its employees’ extended families in the XXXXX who were directly affected by the hurricanes and typhoons in XXXXX, would be taxable to the employees.” The CRA concluded “Probably not, as long as it is a one-time payment that is not remitted to the employees directly and will not result in the employees foregoing any present or future employment compensation as a result thereof.” CRA went on to state that “In these specific facts and circumstances, it is likely that the financial assistance is made in a personal capacity, for philanthropic reasons and not as a payment for services performed by, or conferred as a benefit to, the employees.” CRA also noted that these funds in this circumstance would not be deductible to the Corporation either as a charitable donation under section 110.1 of the Act or “deductible under paragraph 18(1)(a) of the Act, as the payments are not outlays or expenses made or incurred for the purpose of gaining or producing income from the Employer’s business.”
