Taxable Benefits : Tax tips
Driving an expensive company-owned car?
If you drive an expensive company-owned car, especially if it's older than three years, the amount of the associated taxable benefit may make it more economical for you to buy the car from your employer and arrange for an offsetting increase in pay, because your taxable benefit is based on the car's original cost and not its current value.
Training taken primarily for the employer's benefit is not taxable
Certain employer-paid training courses may no longer be taxable benefits for employees, thanks to a Canada Revenue Agency policy change. New guidelines say that training taken primarily for the employer's benefit is not taxable, even if it leads to a degree, diploma, or certificate. A taxable benefit still arises if the training is primarily for the employee's benefit.
Parking provided to employees
Parking provided to employees may constitute a taxable benefit to the employee, requiring an inclusion on their Canadian income tax return. The taxable amount is the fair market value of the parking less any amount the employee pays for the space. If fair market value can't be determined, such as parking in a mall, no taxable benefit results.
Change in policy on employer payment of professional membership fees
The Canada Revenue Agency has announced a change in its policy on employer payment of professional membership fees. Employers can pay such fees on behalf of employees, without triggering a taxable benefit for Canadian income tax purposes, if the employer is the primary beneficiary of the payment. Revenue Canada's previous policy was that such payments were a taxable benefit unless the employee's membership was a condition of employment.
Free or subsidized travel for the personal benefit of an employee or shareholder
If your company owns or leases an aircraft for business purposes and it makes a flight for the primary purpose of providing free or subsidized travel for the personal benefit of an employee or shareholder, a taxable benefit for Canadian income tax purposes will result for the employee or shareholder. The amount of the income tax benefit is usually computed as the cost of a regular first class ticket to the same destination.
Temporarily transferred due to your employment and receive a housing allowance?
If you're being temporarily transferred due to your employment and receive a housing allowance to pay for your lodgings while you're away, the allowance will normally be considered a taxable benefit for Canadian income tax purposes. However, the allowance will not be included in your taxable income if it is for board and lodging at, and transportation to, a temporary work site that is more than 80 km from your home or a "remote work site" that is remote from any established community. To qualify your regular home must be available for your occupancy. If you rent it out for the duration of your posting the allowance will be subject to income tax.
Creating a stock option in your Canadian corporation?
If you’re creating a stock option in your Canadian corporation for a shareholder, be sure to grant the same rights to all of the other shareholders of the same class. Otherwise, the stock option will be considered to be a taxable benefit for Canadian income tax purposes to the shareholder.
Disability insurance receipts
Disability insurance receipts will be free of Canadian income tax only if an employee has paid the insurance premiums personally, or if the premiums for all employees were paid by the employer, and included as a taxable benefit of each employee. If the employer pays the premiums and they are not treated as a taxable benefit for all employees, then any disability insurance benefits will be taxable to the individual recipient.
Employer provided party
CRA (the Canadian tax department) has issued a statement allowing an employee to attend an employer provided party that is generally available to all employees as long as the cost is reasonable (up to $100 per person is their guideline) without having to report a taxable benefit for Canadian income tax purposes.
Personal use of corporate property by owner/manager
An owner/manager of a corporation will have to include as a taxable benefit for Canadian income tax purposes the personal use of corporate property and most loans received. Certain specific loans, such as housing loans, may not have to be taxed.
Taxable automobile benefits
As a result of the changes to the rules relating to taxable automobile benefits, the Canada Revenue Agency (the Canadian income tax department) has indicated that they will become more stringent in requiring automobile logs to document business versus personal use of automobiles.