Tax Tips
TAXABLE EMPLOYEE BENEFITS
The Canada Revenue Agency has made some administrative policy changes related to taxable employee benefits. The changes involve overtime meals and allowances, loyalty programs such as frequent flier points, employer vehicles taken home at night, and non-cash gifts and awards.
In order for the value of overtime meals to not be included in an employee’s income, the value of the meal must not be over $17, the employee must work for two or more hours before or after their regular shift and the overtime must be infrequent and occasional in nature.
Many employees collect loyalty points on their personal credit cards when travelling on employer reimbursed business trips or incurring other business related expenses. The use of these points will not be taxable if the points are not converted to cash, the arrangement is not an alternative form of remuneration and the plan is not for tax avoidance purposes.
Normally the travel between home and work is generally considered personal use of a employer-provided vehicle, which could result in a taxable employee benefit. CRA is willing to apply the normal operating rate of 24¢ per kilometer to this travel if the vehicle is not considered an automobile for Income Tax purposes, the employer prohibits personal use of the vehicle, the employer has bona fide business reasons for requiring the employee to take the vehicle home at night and the vehicle is specifically designed for the employer’s business or trade.
CRA allows for the non-taxation of up to two non-cash gifts or awards costing the employer in total $500 or less and the employer is allowed to deduct these amounts for income tax purposes. These gifts or awards must be made to arm’s length employees and can include long-service/anniversary awards and don’t include items of nominal value such as coffee cups, T-shirts, trophies, etc.
The Tax Department has become very vigilant in their assessment of taxable benefits and all employers should pay close attention to these policy changes.
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