An employee can accumulate points under a loyalty program such as a program sponsored by an airline which allows frequent flyers to accumulate points that can subsequently be exchanged for additional air travel or other benefits.

The value of an employee's accumulated loyalty program points resulting from expenses or business trips you paid for or reimbursed should not be included in the employee's income, unless 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.

If one of these conditions is met, the employee must determine the fair market value (FMV) of the reward received for personal use and report the amount as income in their income tax return for the year.

If you control the number of points accumulated by your employee, such as when the employee uses a company credit card, the employee receives a taxable benefit if they receive a reward for personal use in exchange for points accumulated under the loyalty program.

The value of the taxable benefit is equal to the 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 and L and, where applicable, in box G of the employee's RL-1 slip (see courtesy translation RL-1-T). For more information, go to the Benefit Provided to an Employee page.