Did you have a little too much eggnog at the recent company Christmas party Did the boss spring for a hotel room or for your cab fare home Beware, the kindness of your boss may catch the attention of Revenue Canada (RevCan).

Just ask Peter Dunlap of Ottawa. In 1992 and 1993, Mr. Dunlap attended his company Christmas party and he was entitled to bring a guest to dine, drink, and stay the night in a nearby hotel. His boss picked up the entire tab for everyone who attended. But Mr. Dunlap's employer deducted the costs ($23,632.33 in 1992 and $22,522.53 in 1993) from the company's income and the taxman's folks weren't too pleased.

RevCan bean counters swiftly rose from their desks to swoop down on Mr. Dunlap and his colleagues and slap them with Notices of Reassessment. According to section 6(1)(a) of the Income Tax Act, the food, booze and the bed are all deemed as taxable benefits.

For those of you who haven't read the Income Tax Act lately (shame on you), Section 6(1)(a) contains a clause that states "benefits of any kind whatever - in respect of, in the course of, or by virtue of an office or employment" are to be taxed. So watch out, the next time the boss pats you on the back or sends an email praising your work, the taxman might deem it to be a taxable benefit. You might think this is a stretch, but the broad language in 6(1)(a) makes it entirely possible. Of course the scenario is almost nonsensical - but then again, we are talking about Revenue Canada - but I digress.

The RevCan folks, eager to apply 6(1)(a) with vigour, wasted thousands of taxpayer dollars by going back through the invoices to calculate all costs associated with each of the parties and then divided them up evenly amongst all employees who attended. Mr. Dunlap's 1992 assessment for the party was a taxable benefit of $195.17 and $106.96 for the hotel room. In 1993, the respective benefits were $181.94 and $95.81.

In October 1998, Mr. Dunlap took his fight to the Tax Court, arguing that no "material" or "economic" benefit accrued to him. Indeed, most company-sponsored gatherings are a way of fostering morale and an inexpensive way of rewarding effort, period. But heaven forbid if common sense should permeate the thick walls of the Tax Court. Dunlap and his colleagues have to pay.

In the aftermath of the Tax Court's ruling, Revenue Canada, through an interpretation bulletin, indicated that employers could spring up to $100 per employer without fear of retribution, but this is not good enough. Annual and reasonable morale boosting activities should not be taxed, period! But if Revenue Canada is going to continue playing the Grinch, they should at least strive for accuracy and fairness.

By averaging the employer's costs and applying them equally to all employees, the taxman has committed a great injustice. What about the poor non-drinker who gets dinged for all those who saddled up to the bar during the party Or the vegetarian who ate the half-price pasta dish as opposed to the rest who feasted on prime rib Ahh, I can see it now, next year's CTF party, complete with all my friends and well attired RevCan auditors at each table. Yes, the taxman's folks will be keeping tabs on each glass of red wine that passes my lips and each dinner roll I scarf down to ensure that I am taxed to the max, but at least, I will be taxed accurately. The entire situation would be laughable if it wasn't so real.