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| *The Commerce Journal>>>Canada Taxes |
Pay Tax for Bonus Trip? |
I reveived Notice of Re-assessment for 2005. Previous employer issued another T4A 2005 because of Bonus Trip. I worked for this company as a independent agent. In 2005, the employer sent top agents to Mexico as bonus trip. Now we all got T4A for the value of the trip $2500. The bottom line is we didn't receive this $2500 as income. Now we have to pay about $900 tax for it. Do I need to pay tax for bonus trip? If so, Can I claim the trip as my business expense? Yes, you will have to pay the tax and no you cannot deduct it as a business trip because you paid nothing out that is deductible and you probably conducted no business on the trip. If you win a car on a game show you have to pay taxes on the value of the car. This is no different. Or think of it in another way. If you had paid for the trip yourself you would have done so with after tax income. You still received the benefit of the trip so in the eyes of the almighty tax gods - you did get $2,500. Sorry but it is income and it is not a business expense. Almost all bonuses are a taxable benefit. You must pay income taxes on them. And no, you may not claim it as a business expense. Business expenses are for costs incurred in the process of creating business. Being sent on a 'free' trip to Mexico because you were a top agent does not qualify. |
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