Tax rules, thresholds and administrative procedures can change. Confirm current official requirements and obtain advice for material transactions or unusual facts.
A non-cash item can still be employment income
A benefit may be taxable where the employee receives an economic advantage because of employment. The employer should determine the benefit's value and whether it is subject to income tax, CPP/QPP, EI and GST/HST.
Automobiles
Employer-owned automobiles can create standby-charge and operating-cost benefits where personal use is available. Home-to-regular-workplace travel is generally personal. Accurate business and personal kilometre logs are essential.
Allowances and reimbursements
A reimbursement supported by receipts is different from an allowance. A reasonable per-kilometre automobile allowance can have different treatment from a flat monthly car allowance. Paying an amount through accounts payable does not prevent it from being a taxable benefit.
Gifts and awards
Cash and near-cash items are generally treated differently from qualifying non-cash gifts or awards. Frequency, value, purpose and policy conditions should be reviewed. Gift cards require particular care.
Insurance, parking and personal expenses
Employer-paid life insurance, parking, professional fees, cellphone use and personal bills may create benefits depending on who primarily benefits and the specific rules. The company should not deduct and ignore personal shareholder or employee costs.
Year-end review
Run a benefits checklist before the last payroll. Reconcile vehicle logs, expense reports and general-ledger accounts that may contain personal amounts. Document the valuation and payroll treatment for each employee.
This article provides general Canadian tax information and is not a substitute for tax, legal, financial or investment advice based on complete circumstances.