An employee receives a taxable benefit if he or she receives, for personal use, a reward in exchange for points accumulated under a frequent-flyer program and both of the following conditions are met:
- The points were accumulated as a result of taking business trips paid for by you.
- You control the number of points accumulated by your employee.
The value of the taxable benefit is equal to the fair market value (FMV) of the reward your employee received for personal use. In the case of an airline ticket, for example, the value of the benefit is equal to the FMV of the ticket issued in the name of the employee or a member of the employee's family. However, you must take into account restrictions that may affect the FMV, such as whether the ticket is for first class, business class or economy class.
You have to include the value of the taxable benefit in boxes A, G and L of the employee's RL-1 slip (see courtesy translation RL-1-T).
If you do not control the number of points accumulated by the employee, it is the employee who has to determine the FMV of the reward received for personal use and include that amount in his or her income if one of the following conditions is met:
- The points are converted to cash.
- The plan or arrangement between you and the employee seems to be a form of additional remuneration.
- The plan or arrangement is a form of tax avoidance.