Using AP miles to fly for my company - reimbursed in cash?
Jun 9, 2017, 10:07 am
#1
Original Poster
Join Date: Feb 2013
Posts: 259
Using AP miles to fly for my company - reimbursed in cash?
I know someone here knows this answer - beyond the standard textbook one I am likely to get if I ask the question.
In a nut shell: Is it kosher to use my AP miles to fly business class on a work related trip where they would only normally only pay for PE? I would then request reimbursement of PE seat rate.
I can see lots of problems with this - eg - the company is actually not incurring an expense (ie , no receipt), so it's not a legit business expense?
The downside is I don't collect AQM and AQD on reward flights - and I am on track to get E35, or possibly E50 this year. But, independent of the downside, I'm wondering about the financial legitimacy of this transaction. I'm not looking to be shady at all - it really is a question based on ignorance.
Thoughts?
In a nut shell: Is it kosher to use my AP miles to fly business class on a work related trip where they would only normally only pay for PE? I would then request reimbursement of PE seat rate.
I can see lots of problems with this - eg - the company is actually not incurring an expense (ie , no receipt), so it's not a legit business expense?
The downside is I don't collect AQM and AQD on reward flights - and I am on track to get E35, or possibly E50 this year. But, independent of the downside, I'm wondering about the financial legitimacy of this transaction. I'm not looking to be shady at all - it really is a question based on ignorance.
Thoughts?
Jun 9, 2017, 10:12 am
#2
FlyerTalk Evangelist
Join Date: Nov 2000
Posts: 16,093
I know someone here knows this answer - beyond the standard textbook one I am likely to get if I ask the question.
In a nut shell: Is it kosher to use my AP miles to fly business class on a work related trip where they would only normally only pay for PE? I would then request reimbursement of PE seat rate.
I can see lots of problems with this - eg - the company is actually not incurring an expense (ie , no receipt), so it's not a legit business expense?
The downside is I don't collect AQM and AQD on reward flights - and I am on track to get E35, or possibly E50 this year. But, independent of the downside, I'm wondering about the financial legitimacy of this transaction. I'm not looking to be shady at all - it really is a question based on ignorance.
Thoughts?
In a nut shell: Is it kosher to use my AP miles to fly business class on a work related trip where they would only normally only pay for PE? I would then request reimbursement of PE seat rate.
I can see lots of problems with this - eg - the company is actually not incurring an expense (ie , no receipt), so it's not a legit business expense?
The downside is I don't collect AQM and AQD on reward flights - and I am on track to get E35, or possibly E50 this year. But, independent of the downside, I'm wondering about the financial legitimacy of this transaction. I'm not looking to be shady at all - it really is a question based on ignorance.
Thoughts?
Jun 9, 2017, 10:12 am
#3
Join Date: Apr 2011
Location: YYC
Programs: AC SE 1MM, Marriott Ambassador
Posts: 3,396
I think it will likely depend on what your policy is. I would definitely ask, oh, say, your travel department??? first.
The company I work for has a policy where they will reimburse half the difference between Y and J for those people that are permitted to fly J but choose to fly Y. But it is a written policy with clear details on process for booking and claiming.
The company I work for has a policy where they will reimburse half the difference between Y and J for those people that are permitted to fly J but choose to fly Y. But it is a written policy with clear details on process for booking and claiming.
Jun 9, 2017, 10:56 am
#5
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This may open a can of worms too? If op only get his miles by business travel, the company may want him to use his miles for business travel only. By law, miles collect by business travel are a taxable benefit.
Jun 9, 2017, 10:56 am
#6
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Jun 9, 2017, 10:57 am
#7
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Jun 9, 2017, 11:24 am
#8
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There are quite a few threads about this, including this one after the CRA changed their ruling
Collecting and using personal travel miles on business trips has tax implications
OP
Jamie Golombek, Special to the Financial Post · Tuesday, Feb. 1, 2011
Collecting and using personal travel miles on business trips has tax implications
Many Small-Business owners often turn to their personal Air Miles, Aeroplan or other travel-point accounts to pay for business-related trips. They may have even sought reimbursement from their corporations for the fair-market value of the points they redeemed. But there are tax implications, both to the individuals and their corporations, of such transactions.
Those implications were clearly on at least one taxpayer's mind and the matter was addressed last fall by the Canada Revenue Agency in a technical interpretation letter. The specific case involved a professional corporation -- such as an incorporated accountant, dentist, lawyer, medical doctor, veterinarian or chiropractor -- that reimbursed the professional for tickets obtained using personal Air Miles for employment-related air travel. In this case, the professional accumulated a combination of personal Air Miles and business Air Miles, the latter being accumulated while travelling on employer-paid business trips.
When determining whether business or personal travel miles have been used to obtain tickets for business-related travel, the CRA's general assumption is that the business travel miles are used first. In other words, if you've collected enough business travel miles to cover the amount required for a ticket, the CRA will assume that any amount paid to you by your corporation, in excess of any taxes or fees incurred to actually redeem the travel miles, must be included in your income as an employment benefit.
On the other hand, if the business travel ticket was acquired purely through the redemption of personal travel miles, you can be reimbursed by your corporation for a reasonable amount equal to the fair-market value of the ticket. This fair-market-value reimbursement can then be deducted by your corporation for corporate tax purposes.
What's the appropriate fair market value of the reward ticket? Based on prior jurisprudence, the CRA has adopted the practical approach that it's the price that you would have had to pay for a comparable ticket entitling you to travel on the same flight in the same class and subject to the same restrictions applicable to the reward ticket.
Jamie Golombek is managing director, tax & estate planning at CIBC Private Wealth Management.
E-mail: [email protected]
Read more: http://www.financialpost.com/entrepr...#ixzz1DQx2Z6O9
Collecting and using personal travel miles on business trips has tax implications
Many Small-Business owners often turn to their personal Air Miles, Aeroplan or other travel-point accounts to pay for business-related trips. They may have even sought reimbursement from their corporations for the fair-market value of the points they redeemed. But there are tax implications, both to the individuals and their corporations, of such transactions.
Those implications were clearly on at least one taxpayer's mind and the matter was addressed last fall by the Canada Revenue Agency in a technical interpretation letter. The specific case involved a professional corporation -- such as an incorporated accountant, dentist, lawyer, medical doctor, veterinarian or chiropractor -- that reimbursed the professional for tickets obtained using personal Air Miles for employment-related air travel. In this case, the professional accumulated a combination of personal Air Miles and business Air Miles, the latter being accumulated while travelling on employer-paid business trips.
When determining whether business or personal travel miles have been used to obtain tickets for business-related travel, the CRA's general assumption is that the business travel miles are used first. In other words, if you've collected enough business travel miles to cover the amount required for a ticket, the CRA will assume that any amount paid to you by your corporation, in excess of any taxes or fees incurred to actually redeem the travel miles, must be included in your income as an employment benefit.
On the other hand, if the business travel ticket was acquired purely through the redemption of personal travel miles, you can be reimbursed by your corporation for a reasonable amount equal to the fair-market value of the ticket. This fair-market-value reimbursement can then be deducted by your corporation for corporate tax purposes.
What's the appropriate fair market value of the reward ticket? Based on prior jurisprudence, the CRA has adopted the practical approach that it's the price that you would have had to pay for a comparable ticket entitling you to travel on the same flight in the same class and subject to the same restrictions applicable to the reward ticket.
Jamie Golombek is managing director, tax & estate planning at CIBC Private Wealth Management.
E-mail: [email protected]
Read more: http://www.financialpost.com/entrepr...#ixzz1DQx2Z6O9
Jun 9, 2017, 11:30 am
#9
Join Date: Apr 2015
Location: YVR
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Posts: 3,759
There is a difference between directly reimbursing an expense and giving you what is effectively a travel allowance and then having you purchase your own ticket (with miles or any other form of payment), both for income tax and GST/HST payments.
Your employer will need to know what is going on to properly account for their payments to you. There is nothing wrong with this arrangement so long as the employer is aware of it and accounts for the payments properly.
Submitting a receipt for reimbursement knowing that you did not actually purchase the item on the receipt is a complete non-starter that you should not ever consider doing.
Your employer will need to know what is going on to properly account for their payments to you. There is nothing wrong with this arrangement so long as the employer is aware of it and accounts for the payments properly.
Submitting a receipt for reimbursement knowing that you did not actually purchase the item on the receipt is a complete non-starter that you should not ever consider doing.
Jun 9, 2017, 11:38 am
#10
Join Date: Jan 2016
Posts: 41
Careful with this statement, it is not as clear-cut as you write it.
From http://www.cra-arc.gc.ca/E/pub/tg/t4130/t4130-16e.pdf:
From http://www.cra-arc.gc.ca/E/pub/tg/t4130/t4130-16e.pdf:
Loyalty and other points programs
Your employees may collect loyalty points, such as frequent flyer points or air miles, on their personal credit cards when travelling on business trips, even though you reimburse them for the amounts they spend. Usually, these points can be exchanged or cashed in for rewards (goods or services, including gift cards and certificates). Your employees do not have to include in their income the value of the rewards they received or enjoyed from the points they collect on these business trips, unless any of the following applies:
■ The points are converted to cash.
■ The plan or arrangement between you and the employee seems to be a form of remuneration.
■ The plan or arrangement is a form of tax avoidance.
If any of the conditions above are met, the employee has to declare the fair market value (FMV) of any personal rewards he or she received on an income tax and benefit return.
Your employees may collect loyalty points, such as frequent flyer points or air miles, on their personal credit cards when travelling on business trips, even though you reimburse them for the amounts they spend. Usually, these points can be exchanged or cashed in for rewards (goods or services, including gift cards and certificates). Your employees do not have to include in their income the value of the rewards they received or enjoyed from the points they collect on these business trips, unless any of the following applies:
■ The points are converted to cash.
■ The plan or arrangement between you and the employee seems to be a form of remuneration.
■ The plan or arrangement is a form of tax avoidance.
If any of the conditions above are met, the employee has to declare the fair market value (FMV) of any personal rewards he or she received on an income tax and benefit return.
Jun 9, 2017, 12:55 pm
#12
Join Date: Nov 2013
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(Warning: Novice here)
If your company will pay for a fare bucket that allows upgrades, can you purchase the Y fare and then use your miles to upgrade to J?
If your company will pay for a fare bucket that allows upgrades, can you purchase the Y fare and then use your miles to upgrade to J?
Jun 9, 2017, 12:55 pm
#13
Join Date: Dec 2014
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.......not that I want this to happen but, all airmiles should be taxed at redemption. Not paying the "taxes" on the flight, but the value of the flight itself should be a taxable event. When you fly from YVR to YYZ on free points you are getting a service that is $____. That should be taxed.
................OTOH. Any governmental employee should not earn airmiles while travelling on business. The airmiles should be pooled into an account for the government (federal, state, provincial, local) to redeem later to send other government employees on a flight.
................OTOH. Any governmental employee should not earn airmiles while travelling on business. The airmiles should be pooled into an account for the government (federal, state, provincial, local) to redeem later to send other government employees on a flight.
Jun 9, 2017, 1:18 pm
#14
Join Date: Dec 2002
Posts: 8,001
.......not that I want this to happen but, all airmiles should be taxed at redemption. Not paying the "taxes" on the flight, but the value of the flight itself should be a taxable event. When you fly from YVR to YYZ on free points you are getting a service that is $____. That should be taxed.
Jun 9, 2017, 1:41 pm
#15
Join Date: Jan 2010
Location: SFO
Programs: *G^2, Bonvoyed, NEXUS
Posts: 3,511
.......not that I want this to happen but, all airmiles should be taxed at redemption. Not paying the "taxes" on the flight, but the value of the flight itself should be a taxable event. When you fly from YVR to YYZ on free points you are getting a service that is $____. That should be taxed.
Neither case are taxable concepts in Canada.
................OTOH. Any governmental employee should not earn airmiles while travelling on business. The airmiles should be pooled into an account for the government (federal, state, provincial, local) to redeem later to send other government employees on a flight.