2019-0807801E5 6(16)(a) Disability Benefits

Principal Issues: 1) Whether an employee meets the conditions of paragraph 6(16)(a); 2) Whether the full value of transportation benefits provided may be excluded from the employee's income.

Position: 1) Question of fact. 2) Question of fact, likely yes.

Reasons: The law.

Author: Springate, Sarah
Section: 6(16)(a)

XXXXXXXXXX                                                                         2019-080780
                                                                                                 S. Springate
October 19, 2019

Dear XXXXXXXXXX

Re:  Disability Related Employment Benefits

We are writing in response to your email of May 1, 2019 and to our subsequent telephone conversation of May 6, 2019 (XXXXXXXXXX/Springate), wherein you asked whether employer-provided transportation may be excluded from an employee’s income under subsection 6(16) of the Income Tax Act (“Act”).

In the situation described, an employer (the “Employer”) has recently begun to provide, on a regular basis, an employee (the “Employee”) with transportation between his home and his workplace in the form of taxi or ride sharing (i.e., XXXXXXXXXX) services. Prior to being provided with the transportation benefits, the Employee would typically take public transportation to work. The Employee has had a vision impairment throughout the course of his employment but has only recently informed the Employer that he is considered “blind”. You have asked us to confirm what the Employer’s responsibilities are in terms of determining whether subsection 6(16) of the Act would apply to the Employee and whether the full amount of the transportation benefits that are provided to the Employee may be excluded from the Employee’s income under subsection 6(16) of the Act.

Our Comments

This technical interpretation provides general comments about the provisions of the Income Tax Act and related legislation (where referenced).  It does not confirm the income tax treatment of a particular situation involving a specific taxpayer but is intended to assist you in making that determination.  The income tax treatment of particular transactions proposed by a specific taxpayer will only be confirmed by this Directorate in the context of an advance income tax ruling request submitted in the manner set out in Information Circular IC 70-6R9, Advance Income Tax Rulings and Technical Interpretations.

Paragraph 6(16)(a) of the Act provides for the exclusion from the income of an employee the value of a benefit relating to, or an allowance (not in excess of a reasonable amount) in respect of expenses incurred for, transportation between the individual's ordinary place of residence and their workplace (including parking at or near the workplace). In order to exclude the value of employer provided transportation benefits under paragraph 6(16)(a), the individual must be blind or have a mobility impairment which qualifies them for the disability tax credit under subsection 118.3(1) of the Act.

As noted in Guide RC4064, Disability-Related Information, the Canada Revenue Agency (“CRA”) considers an individual to be blind if, even with the use of corrective lenses or medication, their visions meets either of the following criteria:

*     The visual acuity in both eyes is 20/200 (6/60) or less with the Snellen Chart
  (or an equivalent); or

*     The greatest diameter of the field of vision in both eyes is 20 degrees or less.

It is the responsibility of an employee to show their employer that the conditions of paragraph 6(16)(a) of the Act have been met in order for the employer to exclude the value of a transportation benefit or allowance from the employee’s employment income. Both blind individuals and individuals with a mobility impairment who meet the conditions of paragraph 16(6)(a) are also eligible for the disability tax credit. Therefore, the CRA generally expects that the supporting documentation showing that the conditions of paragraph 6(16)(a) have been met will consist of a completed Form T2201 Disability Tax Credit Certificate and the notice of determination from the CRA stating that Form T2201 has been approved.

The employer should review the documentation received from their employee. If an employee does not meet the conditions of paragraph 6(16)(a) for the year and the employer fails to report and withhold amounts on the transportation benefit, then the employer may be subject to penalties and interest under subsections 227(8) and (8.3) of the Act.

Where an employee meets the conditions of paragraph 6(16)(a), the actual costs of taxi fare, ride sharing services, or para-transportation provided by the employer would be excluded from the employee’s income, notwithstanding the fact that the employee may be capable of taking public transportation.

We trust that these comments will be of assistance to you.

Yours truly,

Sandro D’Angelo, CPA, CMA
Acting Manager
Business and Employment Income Section
Business and Employment Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch

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