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.
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Source: Canada Revenue Agency