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Navigating employer benefits allowances changes requires a thorough understanding of Canada Revenue Agency (CRA) rules to ensure compliance and avoid penalties. KWB can help businesses stay informed about these evolving regulations, ensuring that all employee benefits and allowances are reported correctly. Staying up-to-date with CRA guidelines is crucial for both employers and employees to accurately manage tax obligations related to these benefits.
Overview
This article details the complexities surrounding employer benefits allowances changes and how they impact businesses and employees. It provides clarity on various types of benefits and allowances, along with the tax implications and reporting requirements set by the Canada Revenue Agency.
The discussion also includes a labeled real-world hypothetical scenario involving a small business owner named David, offering practical insights into managing these changes effectively.
- Canadian Rules: Discover the specific regulations governing employer benefits and allowances in Canada.
- Common Questions: Find answers to frequently asked questions about employer benefits and compliance.
Understanding Employer Benefits and Allowances in Canada
Canada Revenue Agency (CRA) has made changes to taxable benefits for employment conditions such as working from home, commuting, meal costs, etc. These changes are valid for the period between March 15 2020 and December 31 2020.
If you’re an employer, take note of these important changes:
If you pay for, reimburse, or provide a reasonable allowance for additional commuting costs incurred by an employee, the CRA will consider the amounts non-taxable, provided these costs are over and above the employee’s regular commuting expenses. This includes vehicles you provide to your employees for commuting.
The same rule applies to employees that are working from home should they be required to travel to your place of business to retrieve necessary equipment or supplies.
You will be expected to maintain appropriate records to demonstrate that any allowances provided to your employees are reasonable in relation to the commuting costs incurred. Your employees will be expected to maintain appropriate records to account for their use of company vehicles. KWB recommends using an app called Triplog to accurately track business mileage.
If your business has closed due to COVID-19 and you provide parking for your employees at your place of business, the CRA will not consider this as a taxable benefit. Once your employees return to work, the CRA will then consider employer-provided parking as a taxable benefit.
Computer and Home Office Equipment
You may have employees working from home at the moment and they may not have the necessary office equipment to perform their usual duties. If you provide or reimburse up to $500 of office equipment (for laptops, printers, etc.) to help your employees carry out their duties, your employee will not receive a taxable benefit.
Any office equipment that you provide to an employee that costs more than $500 must be included in the employee’s income. For example, if you pay for a laptop valued at $600 that your employee will keep after the pandemic, your employee is receiving a taxable benefit of $100 that must be included in their income.
If you pay for, reimburse or provide reasonable allowances for meals for your employees who are working regular hours at your place of business, the amount must be included in their employment income as a taxable benefit.
However, the CRA’s existing policies maintain that there are certain circumstances where an employer can provide an overtime meal or allowance, or a subsidized meal, without the employee receiving a taxable benefit.
Cell Phone and/or Internet Service Plans
The CRA’s existing policies maintain that an employer may pay for or reimburse the cost of an employee’s cell phone service plan or Internet service at home to help carry out their employment duties. The portion used for employment purposes is not a taxable benefit.
More Information
If you are unsure whether you are providing a benefit to an employee, see: Do you give your employee a benefit, an allowance, or an expense reimbursement?
For more information on employer-provided benefits and allowances, see: Guide T4130, Employers’ Guide – Taxable Benefits and Allowances.
KWB strives to keep our clients informed of news that could affect their business and livelihood. To become a KWB client, click here or call us at 780.466.6204.
Source: Canada Revenue Agency
FAQ
Navigating the latest employer benefits allowances changes can be complex, so we’ve compiled answers to some of the most common questions our Edmonton clients have regarding these updates and their implications for CRA rules.
| Question | Answer |
|---|---|
| What specific employer benefits allowances changes impact KWB Accountants & Advisors’ clients in Edmonton, Alberta? | For KWB Accountants & Advisors’ clients in Edmonton, Alberta, the recent employer benefits allowances changes primarily affect how remote work, commuting, and meal costs are categorized. The Canada Revenue Agency (CRA) has updated guidelines clarifying which of these employer-provided allowances are now considered taxable benefits, necessitating a review of current business practices for compliance. |
| What are the implications of the latest employer benefits allowances changes for remote work provisions for businesses in Edmonton, Alberta? | For businesses in Edmonton, Alberta, the latest employer benefits allowances changes mean that reimbursements or allowances for remote work expenses, including home office setups, utilities, or internet access, could now be considered taxable benefits by the Canada Revenue Agency (CRA). Employers must review these updated CRA guidelines to ensure their remote work provisions remain compliant. |
| What specific employer benefits allowances changes impact businesses in Edmonton, and how can KWB Accountants & Advisors help with compliance? | Businesses in Edmonton must understand the latest employer benefits allowances changes from the Canada Revenue Agency (CRA), which impact the taxation of various benefits, including remote work, commuting, and meal costs. KWB Accountants & Advisors helps Edmonton businesses review these updated guidelines to ensure compliance, correctly manage payroll deductions, and avoid penalties. |
| What steps should employers in Edmonton take to keep meal and commuting allowances non-taxable according to the latest Canada Revenue Agency (CRA) guidelines? | Employers in Edmonton should meticulously review and adhere to the specific conditions and limits set by the Canada Revenue Agency (CRA) regarding meal and commuting allowances. This includes documenting expenses properly and ensuring they meet CRA’s criteria to remain non-taxable benefits for employees. |