Are cash advances taxable?

Can't remember how to treat cash advances.
I'm leaning towards them not being taxable as they are simply a loan from the employer that is recovered when the next commission is earned.


The rule of law is that any amount received by an employer on account of an employment arrangement are taxable unless there is a law/rule/ruling that states otherwise.  There are many rules around this area but few, if any, deal with this specific circumstance.

As I recall there are only a couple of circumstances where advances may be treated as loans and these typically related to "home-relocation" or home purchase loans (possibly car purchase loans in the case of directors or salespeople).  However if the employer has a clearly written policy of how and when advances may be issued, and clearly follows such a policy (for all) then it may be allowed.

BUT, if the employee is ALSO a shareholder or related to a shareholder then the taxpayer might have to prove that the advance is not on account of being a shareholder or being a relation to a shareholder; in such a case the the loan may be attributed to the shareholder as income.

It is a tricky area prone to abuse, so be careful.
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