Donna Mazerolle & Associates Newsletter
Issue 2 – June 2011
Are All Benefits Taxable? Maybe, Maybe Not
You’ve likely spent way to much time trying too figure out how to comply with Canada’s tax laws and the Canada Revenue Agency (CRA).
To help clarify your obligations, two items that always raise questions are summarized below. They are “what’s insurable employment” and “what benefits are taxable”?
Should you require details, it would be best to visit http://www.cra-arc.gc.ca/menu-eng.html.
If you have questions about taxable benefits, or need guidance on strategy, business plans, accounting or bookkeeping for your business, call Donna Mazerolle at 506-650-4067 or contact us .
The Employment Insurance Act (EIA) notes that insurable employment does not include the employment of a person that controls more than 40% of the voting shares of the corporation.
It also excludes employment if the employer and employee are not dealing at arm’s length and they do not have a substantially similar contract of employment as other arm’s length employees. (Professional advice may be needed in this area.)
Also, the Employment Insurance Regulations deem certain persons to be involved in insurable employment including stevedores, lumbering or logging, placement or employment agency, barbering or hairdressing establishments, and passenger vehicle operators.
Each of the categories has their own specific details.
CRA Guide T4130 provides information on taxable and non-taxable employment benefits and allowances including board and lodging, cellular phone service, child care expense, counseling services, disability related employment, discounts on merchandise, education benefits, gifts and awards, group term life insurance policies, housing, interest-free and low interest loans, internet use, loyalty and other “points programs”, meals, medical expenses, moving expenses, municipal officers expense allowance, parking, power saws, premiums under provincial hospitalization, private health service plans, professional membership dues, recreational facilities and club dues, RRSPs, security options, social events, spouse’s or common-law partner’s travelling expenses, TFSAs, tool reimbursements, transit passes, transportation to and from home, travel allowances, uniforms and special clothing, and wage-loss replacement plans or income maintenance plans.
The Guide also has a benefits chart, which lists the benefits and the applicability of CPP, EI, and GST/HST.
You can download a PDF of the document here: http://www.cra-arc.gc.ca/E/pub/tg/t4130/t4130-10e.pdf