Randy Petersen points out an interesting Canadian tax case where courts there ruled that a person could deduct the value of the miles they redeemed for a ticket to travel for medical care.
The government said the taxpayer could only deduct the taxes and fees — actual out of pocket case — but the Court ruled that he gave up something of value, something which could be purchased from Aeroplan, and that he had ‘paid’ for the tickets so could deduct the value of that payment.
Now, a Canadian court ruling isn’t an issue for me as a US taxpayer. But what a can of worms this opens! Randy likes the ruling and sees significant implications:
This case and the fact that it was uphold on an appeal sets in place a basis for many frequent flyers to have their use of miles as payment actually amount to something. Now, whether this case will hold up in situations whereby a person can claim a tax deduction when using their miles for a charity or other cause remains to be seen.
But I’m a glass half empty kinda guy. I see that the potential to tax miles received from business travel (which arent’ a rebate, as the recipient hasn’t paid for them) if those miles are valued as though they were cash. I see the potential to tax miles if an employer gives an employee a trip on points earned with the company credit card. So I’m not nearly so enthusiastic. I have come to like and live within the status quo, changes in tax treatment of miles — even up North — are disconcerting to me.