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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