Canada’s Income Tax Act is generally not a place people turn to for easy answers, so figuring out whether benefits provided to employees are taxable or not can prove a challenge.
Here’s a breakdown of the CRA’s take on some of the more common benefits offered by employers:
Automobile allowances
Payments made to employees who use their own vehicle for business travel are non-taxable, as long as the amount is based on a reasonable rate per kilometre, which for 2016 stands at 54 cents for the first 5,000 kilometres and 48 cents after that.
Group health care
Employer contributions to private health services plans, such as for medical or dental coverage, aren’t taxable benefits. However, employer-paid premiums for benefits such as life insurance, accidental death and dismemberment and critical illness insurance are all taxable.
Pensions
Employer contributions to pooled registered pension plans aren’t taxable, but registered retirement savings plan contributions and administration fees paid by employers are taxable benefits.
Cellphones
The CRA will generally consider personal use of a company cellphone to be a non-taxable benefit, as long as the cost is reasonable and the personal use doesn’t cause extra charges outside of the cost of the plan.
Read the full story: Navigating the complexities around the taxability of employee benefits