Shareholder
Nov 3, 00, 8:37 am
A Canadian tax court has ruled that claiming the equivilent ticket value of an award ticket as a tax deducation won't cut it. The court threw out a claim in the case of a lawyer who used her points to fly herself and her family from BC to Ontario when they moved residence a few years ago. Although the cost of transportation would normally be permitted as a deduction as long as the move was related to work, the court refused to recognize the value she ascribed to the award ticket as being an "amount paid" as defined in the tax regulations. Because she had not paid real money for these tickets, and merely cashed in her FF miles, she was unable to claim the imputed value of the points.
Previously, Canadian tax courts have ascribed a value to FF tickets when they are being considered as a taxable benefit. In a case several years ago, a judge ruled that Revenue Canada could indeed tax this as a benefit if the tickets were used for personal travel, but earned through business travel. However, the presiding judge did not accept the tax department's claim that the value of the tickets should be the equivilent of a full fare Y, J or F ticket, depending upon the class of the free one. Instead, a value was created by taking into consideration the marginal value of a free ticket to the airline, and not the full fare pricing. (This is a complex formula which works out to be about 25% of the value of a full fare ticket, but in the case of an economy ticket, no more than the deepest discounted seat sale price.)
Glad I decided to pay for a ticket on my recent move, rather than cash in points. At least I go both points and will be eligible for a tax deduction.
Previously, Canadian tax courts have ascribed a value to FF tickets when they are being considered as a taxable benefit. In a case several years ago, a judge ruled that Revenue Canada could indeed tax this as a benefit if the tickets were used for personal travel, but earned through business travel. However, the presiding judge did not accept the tax department's claim that the value of the tickets should be the equivilent of a full fare Y, J or F ticket, depending upon the class of the free one. Instead, a value was created by taking into consideration the marginal value of a free ticket to the airline, and not the full fare pricing. (This is a complex formula which works out to be about 25% of the value of a full fare ticket, but in the case of an economy ticket, no more than the deepest discounted seat sale price.)
Glad I decided to pay for a ticket on my recent move, rather than cash in points. At least I go both points and will be eligible for a tax deduction.