Canadian Payroll Reporter

3 Canadian HR Reporter, a Thomson Reuters business 2017 Test yourself on taxable benefit rules BY SHEILA BRAWN WITH NUMEROUS laws and regulations to follow, payroll ad- ministration can be a challenge, even for the most seasoned pro- fessionals. One area that can pose difficulties is taxable benefits. There are a number of dif- ferent types of benefits that employers may provide to em- ployees, including automobiles, parking, gym memberships, cell phones, health and dental plans, stock options, Christmas par- ties, and awards. Some of the benefits are sub- ject to income tax deductions, as well as Canada/Quebec Pension Plan (C/QPP) contributions, employment insurance (EI) and Quebec Parental Insurance Plan (QPIP) premiums, and year-end reporting, while others are not. It generally depends on the type of benefit and the reason the employer is providing it. Knowing which benefits are taxable is important for comply- ing with Canada Revenue Agen- cy (CRA) (and Revenu Québec) requirements. However, the rules are some- times complicated and not easy to remember. In fact, the Cana- dian Payroll Association says im- proper assessment and reporting of taxable benefits and allowanc- es are regularly among the top 10 payroll adjustments that the CRA identifies every year. How well do you know taxable benefit rules? Try an test your- self with the following true or false statements. Employers may give employees as many non- cash gifts and awards as they want during a year without a taxable benefit arising as long as the total value of the gifts and awards is not more than $500. True or False? True, as long as the gift is for a special occasion (birthday, wed- ding, religious holiday or birth of a child) and the award is for an employee's "overall contribution to the workplace," not for their job performance. If the total fair market value is more than $500, the excess amount is a taxable benefit. If an employer gives gifts or awards for any other reason, a taxable benefit will arise. To calculate the taxable benefit that results from an employee's personal use of an employer-provided automobile, use the actual cost of the vehicle when the employer bought or leased it. True or False? False. The value of the taxable benefit is made up of three com- ponents: a standby charge (the benefit that applies by allowing the employee to use the vehicle for personal reasons and not just for business), plus an operating cost benefit (which results from an employer paying for automo- bile operating expenses), minus any amounts the employee re- imburses the employer for the standby charge or operating cost benefit in the year. The CRA provides rules and formulas that employers must use to calculate the standby charge and operat- ing cost benefit. The value of a taxable benefit must always be included in an employee's income when calculating C/QPP contributions and EI and QPIP premiums. True or False? False. All taxable benefits are subject to C/QPP contributions (if the type of employment is covered under C/QPP), as well as income tax deductions, but not necessarily EI and QPIP see TRUE OR FALSE page 8 News CPR | October 2017

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