Jack asked:

Do I have to claim air mile bonuses that we have earned from bus purchases as personal income?

Nanette Neumann answered:

If an employee accumulates air miles bonus points while travelling on business trips which the employer has paid for and then redeems them for personal travel or other benefits for the employee or the employee's family members, then the fair market value of the points redeemed is to be included in income from employment.

With respect to calculating the fair market value of air travel, the Tax Court of Canada has determined that that value may not necessarily be the normal air fare that would otherwise have been paid. This is intended to provide for the fact that travelling conditions are generally restricted when air miles points are used.

The use of the air miles points is to be reported as a taxable benefit on the employee's T4 if the employer tracks the use of those points. When the benefits accrue directly to the employee, it is the employee's responsibility to self-assess and include the value in income on the tax return for the year in which the benefits are realized.

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