Employers’ Guide

Taxable Benefits and Allowances

Available electronically only

T4130(E) Rev. 21
Is this guide for you?
Use this guide if you are an employer and you provide Services Office in the province or territory of your residence
benefits or allowances to your employees, including or place of business. See the table found on Form CPT1 for
individuals who hold an office, for items such as: the mailing addresses. For more information on
employment status, see Guide RC4110, Employee or
■ automobiles or other motor vehicles
Self-Employed?
■ board and lodging
A benefit or allowance can be paid to your employee in
■ gifts and awards cash (such as a meal allowance) or provided to your
employee in a manner other than cash (such as a parking
■ group term life insurance policies space or a gift).
■ interest-free or low-interest loans You may have to include the value of a benefit or allowance
■ meals in an employee’s income, depending on the type of benefit
or allowance and the reason you give it.
■ security options
This guide explains your responsibilities and shows you
■ tool reimbursement or allowance how to calculate the value of taxable benefits or allowances.
■ transit passes For information on calculating payroll deductions, go
■ tuition fees to canada.ca/payroll or see Guide T4001, Employers’
Guide – Payroll Deductions and Remittances.
If you or a person working for you is not sure of the
worker's employment status, either one of you can request For information on filing an information return, go
a ruling to determine the status. If you are a business to canada.ca/taxes-slips or see the following guides:
owner, you can use the “Request a CPP/EI ruling” service ■ RC4120, Employers’ Guide – Filing the T4 Slip and
in My Business Account at canada.ca/my-cra-business Summary
-account. If you are an individual, you can use the “Request
a CPP/EI ruling” service in My Account at canada.ca/my ■ RC4157, Deducting Income Tax on Pension and Other
-cra-account. You can also fill out and mail Form CPT1, Income, and Filing the T4A Slip and Summary
Request for a CPP/EI Ruling – Employee or
Self-Employed? to the CPP/Rulings Division at the Tax

Our publications and personalized correspondence are available

in braille, large print, e-text, or MP3 for those who have a visual
impairment. For more information, go to canada.ca/cra-multiple
-formats or call 1-800-959-5525.

La version française de ce guide est intitulée Guide de l’employeur – Avantages et allocations imposables.

canada.ca/taxes
What’s new?
We list the service enhancements and major changes below, including announced income tax changes that are not yet law at
the time this guide was published. If they become law as proposed, they will be effective for 2021 or as of the dates given.
For more information about these changes, see the areas outlined in colour in this guide.
For information on changes regarding CRA’s Taxable, benefit administration policies due to COVID-19, go
to canada.ca/en/revenue-agency/campaigns/covid-19-update/covid-19-benefits-credits-support-payments/employer
-provided-benefits.

Security options deduction

Effective on June 29, 2021, the CRA introduced some new tax rules for employees security options deduction. For security
options granted on or after July 1, 2021, if you are not a Canadian-controlled private corporation and you have, or are part
of a consolidated group that has, gross revenues of more than $500 million, the employee is subject to a $200,000 annual
vesting limit. For more information about the changes that will take effect on July 1, 2021 for certain employers and how
these changes affect the calculation of the deduction amount, go to canada.ca/taxes-security-options. For more information,
see Security options deduction – Paragraph 110(1)(d) on page 32.

Automobile standby charge and operating cost benefits

As a temporary COVID-19 response measure, if an employee used an automobile more than 50% of the distance driven for
business purposes in the 2019 tax year, they will be considered to have used the automobile more than 50% of the distance
driven for business purposes in the 2020 and 2021 tax year. For more information, go to canada.ca/taxes-auto-motor
-benefits.

canada.ca/taxes
Table of contents
Page Page
Chapter 1 – General information ..................................... 6 Subsidized school services .............................................. 20
Do you give your employee a benefit, an allowance, Scholarships, bursaries, tuition, and training .............. 20
or an expense reimbursement? ...................................... 6 Scholarship and tuition fees ............................................ 20
What are your responsibilities? ......................................... 6 Employment insurance premium rebate .......................... 20
Determine if the benefit is taxable ................................. 6 Gifts, awards, and long-service awards ............................ 21
Calculate the value of the benefit .................................. 6 Rules for gifts and awards ............................................... 21
Calculate payroll deductions .......................................... 7 Value.................................................................................... 21
File an information return ............................................... 8 Policy for non-cash gifts and awards............................. 21
Employee’s allowable employment expenses ................. 8 Long-service awards ......................................................... 21
Awards from a manufacturer ......................................... 22
Chapter 2 – Automobile and motor vehicle benefits
Group term life insurance policies – Employer-paid
and allowances .............................................. 8
premiums............................................................................ 22
Definitions ............................................................................. 8
Calculating the benefit ..................................................... 22
Automobile ........................................................................ 8
Reporting the benefit ........................................................ 22
Employee ........................................................................... 9
Housing or utilities ............................................................... 22
Motor vehicle..................................................................... 9
Housing or utilities – benefit ........................................... 23
Personal driving (personal use) ..................................... 9
Housing or utilities – allowance ..................................... 23
Vehicle ................................................................................ 10
Reporting the benefit ........................................................ 23
Keeping records .................................................................... 10
Clergy residence ................................................................ 23
Calculating automobile benefits ........................................ 10
Income maintenance plans and other insurance
Calculating a standby charge for automobiles you
plans .................................................................................... 24
own or lease ................................................................... 10
Non-group plans ............................................................... 24
Calculating an operating expense benefit .................... 12
Group sickness or accident insurance plans................. 24
Benefit for motor vehicles not defined as an
Employee-pay-all plans ................................................... 24
automobile ......................................................................... 13
Group disability benefits – insolvent insurer ............... 24
Motor vehicle home at night policy .............................. 13
Loans – interest-free and low-interest ............................... 24
Reporting automobile or motor vehicle benefits ........ 14
Exceptions .......................................................................... 24
Automobile and motor vehicle allowances ..................... 14
Loans received because of employment ....................... 25
Reasonable per-kilometre allowance ............................ 14
Loans received because of shareholdings ..................... 25
Per-kilometre allowance rates that are not
Home-purchase loan ........................................................ 26
considered reasonable.................................................. 15
Home-relocation loans ..................................................... 26
Flat-rate allowance ........................................................... 15
Forgiven loans ................................................................... 26
Combination of flat-rate and reasonable
Reporting the benefit ........................................................ 26
per-kilometre allowances ............................................ 15
Prescribed interest rates ................................................... 26
Reimbursement or advance for travel expenses ......... 15
Loyalty and other points programs ................................... 26
Averaging allowances ......................................................... 15
Meals ....................................................................................... 27
Reducing tax deductions at source on automobile
Overtime meals or allowances ........................................ 27
or motor vehicle allowances ....................................... 16
Subsidized meals ............................................................... 27
Reporting automobile or motor vehicle allowances
Medical expenses .................................................................. 27
on the T4 slip ................................................................. 16
Moving expenses and relocation benefits ......................... 27
Chapter 3 – Other benefits and allowances ................... 16 Moving expenses paid by employer that are not a
Aircraft Benefits .................................................................... 16 taxable benefit ................................................................ 27
Board and lodging................................................................ 16 Moving expenses paid by employer that are a
Exceptions to the rules ..................................................... 16 taxable benefit ................................................................ 28
Board and lodging allowances paid to players on Non-accountable moving allowances............................ 28
sports teams or members of recreation programs ...... 16 Municipal officer’s expense allowance ............................. 28
Board, lodging, and transportation – Special work Parking .................................................................................... 29
sites and remote work locations .................................... 17 Pooled registered pension plans (PRPP) ........................... 29
Special work sites ............................................................. 17 Power saws and tree trimmers ........................................... 29
Remote work locations .................................................... 17 Premiums under provincial hospitalization, medical
Payroll deductions............................................................ 18 care insurance, and certain Government of Canada
Cellular phone and Internet services ................................ 18 plans .................................................................................... 29
Child care expenses.............................................................. 18 Private health services plan premiums ............................. 29
Counselling services ............................................................ 19 Professional membership dues ........................................... 30
Disability-related employment benefits ........................... 19 Recreational facilities and club dues ................................. 30
Payroll deductions............................................................ 19 Registered retirement savings plans (RRSPs) .................. 30
Discounts on merchandise and commissions from Payroll deductions ............................................................ 30
personal purchases ........................................................... 19 Security options ..................................................................... 31
Education benefits ................................................................ 19 Taxable benefit ................................................................... 31
Educational allowances for children ............................. 19 Cash-outs ............................................................................ 31

4 canada.ca/taxes
 Payroll Deductions ........................................................... 32 Situations where you are not considered to
Security options deduction – Paragraph 110(1)(d) ..... 32 have collected the GST/HST ........................................... 39
Security options deduction for the disposition of How to calculate the amount of the GST/HST you
shares of a Canadian-controlled private are considered to have collected..................................... 39
corporation – Paragraph 110(1)(d.1) .......................... 32 Value of the benefit ........................................................... 39
Designation of non-qualified securities........................ 32 Automobile operating expense benefits........................ 40
Notification requirements for non-qualified Benefits other than automobile operating expense
securities...................................................................... .. 32 benefits ............................................................................ 40
Charitable donations...................................................... . 32 When and how to report the GST/HST you are
Social events .......................................................................... 33 considered to have collected ........................................... 40
Spouse’s or common-law partner’s travelling Automobile benefits – standby charges, operating
expenses ............................................................................. 33 expense benefit, and reimbursements ....................... 41
Tax-free savings account (TFSA) ....................................... 33 Input tax credits (ITCs) ........................................................ 41
Tickets..................................................................................... 33 ITC restrictions .................................................................. 42
Reporting the benefit ....................................................... 33 Property acquired before 1991 or from a
Tool reimbursement or allowance ..................................... 33 non-registrant .................................................................... 42
Transportation passes .......................................................... 34
Benefits chart ........................................................................ 44
Airline passes for employees and retirees of an
airline company ............................................................ 34 Digital services ..................................................................... 46
Transit passes .................................................................... 34 Handling business taxes online .......................................... 46
Transit passes – employees of a transit company ....... 34 CRA BizApp....................................................................... 46
Travel allowance................................................................... 34 Receiving your CRA mail online .................................... 46
Part-time employee .......................................................... 34 Authorizing the withdrawal of a pre-determined
Salesperson and clergy .................................................... 34 amount from your Canadian chequing account ...... 46
Other employees ............................................................... 34
Reasonable travel allowances ......................................... 35 For more information .......................................................... 47
Uniforms and protective clothing ..................................... 35 What if you need help? ........................................................ 47
Addresses ............................................................................... 47
Chapter 4 – Housing and travel assistance benefits Tax services offices............................................................ 47
paid in a prescribed zone............................ 35 Tax centres .......................................................................... 47
Accommodation or utilities provided by the Direct deposit......................................................................... 47
employer ............................................................................ 35 Forms and publications ....................................................... 47
Places with developed rental markets .......................... 35 Electronic mailing lists ......................................................... 47
Places without developed rental markets .................... 36 Related publications ............................................................. 47
Allowable ceiling amounts ............................................. 36 Tax Information Phone Service (TIPS) .............................. 47
Board, lodging, and transportation at a special Teletypewriter (TTY) users ................................................. 47
work site in a prescribed zone ........................................ 36 Complaints and disputes ..................................................... 47
Travel assistance benefits .................................................... 37 Service complaints ............................................................ 47
Medical travel assistance ................................................. 37 Formal disputes (objections and appeals)..................... 47
Reprisal complaints .......................................................... 47
Chapter 5 – Remitting the GST/HST on employee
Due dates ................................................................................ 48
benefits ........................................................... 38
Cancel or waive penalties or interest ................................. 48
Employee benefits ................................................................ 38
Employee does not pay the GST/HST on taxable
benefits............................................................................ 38
Do you have to remit GST/HST on employee
taxable benefits? ............................................................ 38

canada.ca/taxes 5
 Whether or not a benefit is taxable depends on whether an
Chapter 1 – General information employee or officer receives an economic advantage that
can be measured in money, and whether that individual is
Do you give your employee a benefit, the primary beneficiary of the benefit.
an allowance, or an expense For more information on the term primary beneficiary,
reimbursement? see paragraphs 2.14 and 2.23 to 2.25 of Income Tax
Your employee has received a benefit if you pay for or give Folio S2-F3-C2, Benefits and Allowances Received from
Employment. For some common examples of taxable
something that is personal in nature:
benefits, see Chapters 2 to 4 of this guide.
■ directly to your employee
The benefit may be paid in cash (such as a meal allowance
■ to a person who does not deal at arm’s length with the or reimbursement of personal cellular phone charges), or
employee (such as the employee’s spouse, child, or provided in a manner other than cash, such as a parking
sibling) space or a gift certificate. For more information and
examples, go to ”Pensionable and insurable earnings”
A benefit is a good or service you give, or arrange for a
at canada.ca/cpp-ei-explained.
third party to give, to your employee such as free use of
property that you own. A benefit includes an allowance or The manner in which you pay or provide the benefit to
a reimbursement of an employee’s personal expense. your employee will affect the payroll deductions you have
to withhold. For more information, see “Calculate payroll
An allowance or an advance is any periodic or lump-sum
deductions” on page 7.
amount that you pay to your employee on top of salary or
wages, to help the employee pay for certain anticipated
expenses without having him or her support the expenses. Calculate the value of the benefit
An allowance or advance is: Once you determine that the benefit is taxable, you need to
calculate the value of the specific benefit.
■ usually an arbitrary amount that is predetermined
without using the actual cost The value of a benefit is generally its fair market value
(FMV). This is generally the amount the employee would
■ usually for a specific purpose
have had to pay for the same benefit, in the same
■ used as the employee chooses, since the employee does circumstances, if there was no employer-employee
not provide receipts relationship.
An allowance can be calculated based on distance, time or The cost to you for the particular property, good, or service
something else, such as a motor vehicle allowance using the may be used if it reflects the FMV of the item or service.
distance driven or a meal allowance using the type and
You must be able to support the value if you are asked.
number of meals per day.
A reimbursement is an amount you pay to your employee Goods and services tax/harmonized sales tax
to repay expenses they incurred while carrying out the (GST/HST) and provincial sales tax (PST)
duties of employment. The employee has to keep proper When you calculate the value of the taxable benefit you
records (detailed receipts) to support the expenses and give provide to an employee, you may have to include:
them to you.
■ the GST/HST payable by you
What are your responsibilities? ■ the PST that would have been payable if you were not
exempt from paying the tax because of the type of
If you provide benefits to your employees, you always have employer you are or the nature of the use of the property
to go through the same steps. If a step does not apply to or service
you, skip it and go on to the next step:
Use the “Benefits chart,” on page 44 to find out if you
■ determine if the benefit is taxable should include GST/HST in the value of the benefit. Some
■ calculate the value of the benefit benefits have further information about GST/HST in the
topic specific section.
■ calculate payroll deductions
The amount of the GST/HST you include in the value of
■ file an information return the taxable benefits is calculated on the gross amount of the
Note benefits, before any other taxes and before you subtract any
In this guide, “employee” includes an individual who amounts the employee reimbursed you for those benefits.
holds an office, unless otherwise noted. You do not have to include the GST/HST for:

Determine if the benefit is taxable ■ cash remuneration (such as salary, wages, and
allowances)
Your first step is to determine whether the benefit you
provide to your employee is taxable and has to be included ■ a taxable benefit that is an exempt supply or a zero-rated
in their employment income when the benefit is received or supply as defined in the Excise Tax Act
enjoyed.

6 canada.ca/taxes
For more information on exempt or zero-rated supplies, go Income tax – When a cash benefit is taxable, you have to
to canada.ca/gst-hst or see Guide RC4022, General deduct income tax from the employee’s total pay in the pay
Information for GST/HST Registrants. period.
If you are a GST/HST registrant, you may have to remit the
Non-cash or near-cash benefits
GST/HST for the taxable benefits you provide to your
employees. For more information, go to canada.ca/gst-hst A non-cash (or “in kind”) benefit is the actual good, service,
-remitting-employee-benefits or see “Chapter 5 – or property that you give to your employee. This includes a
Remitting the GST/HST on employee benefits.” payment you make to a third party for the particular good
or service if you are responsible for the expense.
Note
The GST/HST rates used in this guide are based on the A near-cash benefit is one that functions as cash, such as a
current rates set under the Excise Tax Act and its gift certificate or gift card, or something that can easily be
regulations for taxable benefits provided in the 2021 tax converted to cash, such as a security, stock, or gold nugget.
year. For more information on near-cash benefits, see “Gifts,
awards, and long-service awards” on page 21.
Calculate payroll deductions CPP – When a non-cash or near-cash benefit is taxable, it is
After you calculate the value of the benefit, including any also pensionable. This means you have to deduct CPP
taxes that may apply, add this amount to the employee’s contributions from the employee’s pay. It also means that
income for each pay period or when the benefit is received you have to pay your employer’s share of CPP to the CRA.
or enjoyed. This gives you the total amount of income from Notes
which you have to make payroll deductions. You then Except for security options, if a non-cash taxable benefit
withhold deductions from the employee’s total pay in the is the only form of remuneration you provide to your
pay period in the normal manner. The deductions you employee in the year, there is no remuneration from
withhold, especially the employment insurance (EI) which to withhold deductions. You do not have to
premiums, will depend on whether the benefit you provide withhold CPP contributions on the amount of the
is cash, non-cash, or near-cash. benefit, even if the value of the benefit is pensionable.
Note Also, you do not have to remit your share of the CPP
If you provide your employee with a monthly taxable amounts.
benefit, you may include a prorated value in your Always report the value of the non-cash benefit in box 14
employee’s income in each pay period in the month. “Employment income,” and box 26 “CPP/QPP
pensionable earnings,” of the T4 slip, even if you did not
Cash benefits have to deduct CPP/QPP contributions.
Cash benefits include such things as:
EI – A taxable non-cash or near-cash benefit is generally not
■ physical currency insurable. Do not deduct EI premiums.
■ cheques Exceptions to this rule are:
■ direct deposit ■ The value of board and lodging an employee receives
during a period in which you pay the employee a salary
Canada Pension Plan (CPP) – When a cash benefit is
in cash. For more information, see “Board and lodging,”
taxable, it is also pensionable. This means you have to
on page 16
deduct CPP contributions from the employee’s pay. It also
means that you have to pay your employer’s share of CPP ■ Employer-paid RRSP contributions when the employee
to the Canada Revenue Agency (CRA). can withdraw the amounts. For more information,
see ”Registered retirement savings plans (RRSPs)” on
If the employment is not pensionable under the CPP, then
page 30
any taxable benefits paid in cash are not pensionable and
CPP contributions should not be withheld. For more Income tax – When a non-cash or near-cash benefit is
information, see “Employment, benefits, and payments taxable, you have to deduct income tax from the
from which you do not deduct CPP contributions” in employee’s total pay in the pay period. Except for security
Chapter 2 of Guide T4001, Employers’ Guide – Payroll options, if a non-cash or near-cash benefit is of such a large
Deductions and Remittances. value that withholding the income tax will cause undue
hardship, you can spread the tax you withhold over the
Employment insurance (EI) – When a cash benefit is
balance of the year. We consider undue hardship to occur if
taxable, it is also insurable. This means you have to deduct
the required withholding results in your employee being
EI premiums from your employee’s pay. It also means that
unable to pay reasonable expenses related to basic family
you have to pay the employer’s share of EI to the CRA.
needs. Basic family needs are those related to food,
If the employment is not insurable under the Employment clothing, shelter, health, transportation, and childcare.
Insurance Act, then any taxable benefits paid in cash are
Note
not insurable and EI premiums should not be withheld. For
Except for security options, if a non-cash or near-cash
more information, see “Employment, benefits, and
taxable benefit is the only form of remuneration you
payments from which you do not deduct EI premiums” in
provide to your employee, there is no remuneration
Chapter 3 of Guide T4001, Employers’ Guide – Payroll
from which to withhold deductions. You do not have to
Deductions and Remittances.

canada.ca/taxes 7
 withhold income tax on the amount of the benefit, even you include the allowance in the employee’s
if the value of the benefit is taxable. employment income as a taxable benefit; or
For more information on calculating payroll deductions, go ■ You have a formal telework arrangement with your
to canada.ca/payroll or see Guide T4001, Employers’ employee that allows this employee to work at home.
Guide – Payroll Deductions and Remittances. Your employee pays for the expenses of this work space
on their own
Benefits chart
Use the “Benefits chart” on page 44 to find out if you You have to fill out and sign Form T2200, Declaration of
should deduct CPP contributions and EI premiums on the Conditions of Employment, and give it to your employee so
taxable amounts, and which codes to use to report the they can deduct employment expenses from their income.
taxable amounts on an employee’s T4 slip. The chart also By signing the form, you are only certifying that the
shows whether to include GST/HST in the value of the employee met the conditions of employment and had to
benefit for income tax purposes. pay for the expenses under their employment contract.

File an information return It is the employee’s responsibility to claim the expenses on

their income tax and benefits return and to keep records to
If you are an employer, report the value of the taxable support the claim.
benefit or allowance on a T4 slip in box 14, “Employment
income.” Also report the value of the taxable benefit or For more information on allowable employment expenses,
allowance in the “Other information” area at the bottom of see:
the employee’s slip and use code 40, unless we tell you to ■ Guide T4044, Employment Expenses
use a different code.
■ Interpretation Bulletin IT-522R, Vehicle, Travel and Sales
If you are a third-party payer providing taxable benefits or Expenses of Employees
allowances to employees of another employer, report the
benefits in the “Other information” area at the bottom of ■ Interpretation Bulletin IT-352R, Employee’s Expenses,
the T4A slip. Use the code provided for the specific benefit. Including Work Space in Home Expenses
■ Information Circular IC73-21R, Claims for Meals and
Example Lodging Expenses of Transport Employees
If you are a third party who provides travel benefits (travel
assistance in a prescribed zone) to the employee of another
employer, report these benefits under code 028 "Other Chapter 2 – Automobile and
income," in the "Other information" area at the bottom of
the T4A slip.
motor vehicle benefits and
allowances
If a benefit or an allowance described in this guide is
Information on the topics discussed in this chapter can be
non-pensionable, non-insurable, and non-taxable, do not
found at:
include it in income and do not report it on an information
slip. ■ canada.ca/taxes-auto-motor-benefits
For more information on reporting benefits and allowances, ■ IT-63R, Benefits, Including Standby Charge for an
go to canada.ca/taxes-slips or see the following guides: Automobile, from the Personal Use of a Motor Vehicle
Supplied by an Employer – After 1992
■ RC4120, Employers’ Guide – Filing the T4 Slip
and Summary ■ IT-522R, Vehicle, Travel and Sales Expenses of
Employees
■ RC4157, Deducting Income Tax on Pension and Other
Income, and Filing the T4A Slip and Summary ■ canada.ca/automotor-allowances and select “Facts about
automobile and other vehicle benefits and automobile
Employee’s allowable employment allowances”
expenses
Definitions
Your employee may be able to claim certain employment
expenses on their income tax and benefit return if, under Read through the following definitions. They will help you
the contract of employment, the employee had to pay for understand the terms and expressions we use in the
the expenses in question. This contract of employment does information that follows.
not have to be in writing but you and your employee have
to agree to the terms and understand what is expected. Automobile
An automobile is a motor vehicle that is designed or
Examples adapted mainly to carry individuals on highways and
■ You allow your employee to use his personal motor streets, and has a seating capacity of not more than the
vehicle for business and pay him a monthly motor driver and eight passengers.
vehicle allowance to pay for the operating expenses and

8 canada.ca/taxes
If the vehicle you provide to your employee is not included Motor vehicle
in the definition of automobile as described, see “Benefit for A motor vehicle is an automotive vehicle designed or
motor vehicles not defined as an automobile” on page 13. adapted for use on highways and streets. It does not
An automobile does not include: include a trolley bus or a vehicle designed or adapted for
use only on rails. Although an automobile is a kind of
■ an ambulance motor vehicle, we treat them differently for income tax
■ clearly marked police or fire emergency response purposes.
vehicles Zero-emission vehicles are cars and trucks powered by
■ clearly marked emergency medical response vehicles that rechargeable electric batteries or hydrogen fuel cells.
you use to carry emergency medical equipment and one
or more emergency medical attendants or paramedics Personal driving (personal use)
■ a motor vehicle you bought to use primarily (more than Personal driving is any driving by an employee, or a person
50% of the distance driven) as a taxi, a bus used in a related to the employee, for purposes not related to their
business of transporting passengers, or a hearse in a employment.
funeral business An employee may use one of your owned or leased
■ a motor vehicle you bought to sell, rent, or lease in a vehicles for purposes other than business or, an employee
motor vehicle sales, rental, or leasing business, except for may use their personal vehicle to carry out employment
benefits arising from personal use of an automobile duties and get an allowance for the business use of that
vehicle. Whatever the situation, if your employee drives
■ a motor vehicle (other than a hearse) you bought to use your vehicle for personal reasons or you reimburse your
in a funeral business to transport passengers, except for employee for the personal driving of their own vehicle,
benefits arising from personal use of an automobile there is a taxable benefit that has to be calculated and
■ a van, pickup truck, or similar vehicle that meets either of included in their income.
the following criteria: Personal driving includes:
– can seat no more than the driver and two passengers, ■ vacation trips
and in the year it is acquired or leased is used (50% or
more of the distance driven) to transport goods or ■ driving to conduct personal activities
equipment in the course of business ■ travel between home and a regular place of employment,
– in the year it is acquired or leased, it is used (90% or other than a point of call
more of the distance driven) to transport goods, ■ travel between home and a regular place of employment
equipment, or passengers in the course of business even if you insist the employee drives the vehicle home,
or such as when they are on call

■ pickup trucks that you bought or leased in the tax year Regular place of employment
that meet both of the following criteria: A regular place of employment is any location where your
– are used (50% or more of the distance driven) to employee regularly reports for work or performs the duties
transport goods, equipment, or passengers in the of employment. In this case, “regular” means there is some
course of earning or producing income degree of frequency or repetition in the employee’s
reporting to that particular work location in a given pay
– are used at a remote work location or at a special work period, month, or year. This “place” does not have to be an
site that is at least 30 kilometres away from any establishment of the employer.
community having a population of at least 40,000
A regular place of employment may include:
Note
If the back part or trunk of a van, pickup truck, or ■ the office where your employee reports daily
similar vehicle has been permanently altered and can no ■ several store locations that a manager visits monthly
longer be used as a passenger vehicle, it is no longer
considered an automobile as long as it is used primarily ■ a client’s premises when an employee reports there daily
for business. for a six month project
■ a client’s premises if the employee has to attend biweekly
Employee meetings there
While the information in this chapter relates to an
Depending on the circumstances, your employee may have
employee, it may also apply to the following taxpayers:
more than one location where they regularly report for
■ a person related to the employee work. If your employee has multiple regular work locations
and travels between home and several work locations
■ an individual who holds an office or person related to during the day, only the trip from your employee’s home to
that individual the first work location or, the trip from the last work
■ a partner or person related to the partner location to home is personal driving. Any travel by the
employee between work locations is business related.
■ a shareholder or person related to the shareholder

canada.ca/taxes 9
Exceptions ■ Worksheet – You can get Form RC18, Calculating
Where you provide your employees with transportation to Automobile Benefits, by going to canada.ca/cra-forms
a regular place of employment, it may not be a taxable -publications or by calling 1-800-959-5525
benefit if either of the following applies:
■ You need to provide your employees with transportation Calculating a standby charge for automobiles
from pickup points to an employment location when you own or lease
public and private vehicles are neither allowed nor The standby charge is for the benefit your employee gets
practical at the location because of security or other when your owned or leased automobile is made available
reasons for their personal use. Any reimbursements you receive
■ You need to provide transportation to your employee from your employee, other than expenses relating to the
who works at a special work site or a remote location. If operation of the automobile, will decrease the standby
so, see “Board, lodging, and transportation – Special charge that has to be included in your employee’s income.
work sites and remote work locations,” on page 17 The following information about personal use, availability
and reducing the standby charge is the same whether you
Point of call own the automobile or lease it.
A point of call is a place the employee goes to perform their
employment duties other than the employee’s regular place Availability and personal use
of employment. An automobile is available to your employee if they have
We will consider the employee’s travel between their home access to or control over the vehicle. It includes any part of
to a point of call to be “business” driving (and not a taxable a day, weekends and holidays during the calendar year.
benefit) if you need or allow the employee to travel directly If your employee does not use your automobile for any
from home to a point of call (such as a salesperson visiting personal driving, there is no taxable benefit, even if the
customers, going to a client’s premises for a meeting, or automobile is available to your employee for the entire
making a repair call) or to return home from that point. year. This applies as long as the kilometres driven by your
Note employee were in the course of their employment duties
It must be reasonable that the employee’s travel to the and the vehicle is returned to your premises at the end of
point of call be made at that time and on the way to or their work day.
from work. If it is unreasonable, then that distance is
personal driving and is a taxable benefit. Reducing the standby charge
Calculate the standby charge at a reduced rate if all of the
Vehicle following conditions apply:

The term “vehicle” used in this chapter includes both ■ you require your employee to use the automobile to
automobiles and motor vehicles not defined as perform their duties
automobiles. ■ the employee uses the automobile more than 50% of the
distance driven for business purposes
Keeping records ■ the kilometres for personal use is not more than 1,667 per
You and your employees have to keep records on the usage 30-day period or a total of 20,004 kilometres a year
of the vehicle so that you can properly identify the business
and personal use amounts of the total kilometres driven in Use one of the following tools to apply the reduced rate:
a calendar year by an employee or a person related to the ■ The Automobile Benefits Online Calculator, for 2018 and
employee. The records may contain information relating to subsequent years, at canada.ca/automobile-benefits
the business destination such as the date, the name and -calculator
address of the client, and the distance travelled between
home and the client’s place of business. For more ■ Form RC18, Calculating Automobile Benefits
information, go to canada.ca/taxes-records.
Automobile you own
There are two methods to calculate the standby charge
Calculating automobile benefits when you own the automobile – the simplified calculation
The benefit for an automobile you provide is generally: and the detailed calculation.
■ a standby charge for the year; plus The simplified calculation has certain conditions that the
employee has to meet. If the conditions are not met, you
■ an operating expense benefit for the year; minus
have to use the detailed calculation. To find out which
■ any reimbursements employees make in the year for calculation method is better for your employee, use
benefits you otherwise include in their income for the Form RC18, Calculating Automobile Benefits.
standby charge or the operating expenses
The following information will help you fill in Form RC18
You can use the following tools to calculate the benefits: and the Automobile Benefits Online Calculator.
■ Automobile Benefits Online Calculator
at canada.ca/automobile-benefits-calculator

10 canada.ca/taxes
1) Your automobile costs Standby Charge for an Automobile, from the Personal Use
The cost of your automobile for determining the standby of a Motor Vehicle Supplied by an Employer – After 1992.
charge is the total of the following two amounts:
Automobile you lease
■ the cost of the automobile when you bought it, including
options, accessories, and the GST/HST and PST, but not You must use the detailed calculation to calculate the
including any reduction for a trade-in standby charge for employer leased automobiles. The
following information will help you fill in Form RC18 and
■ the cost of additions (including the GST/HST and PST) the Automobile Benefits Online Calculator.
you made to the automobile after you bought it (that you
add to the capital cost of the automobile to calculate the 1) Your leasing costs
deduction for depreciation) Leasing costs of your automobile used in calculating the
standby charge includes both of the following:
Note
Where the automobile was purchased from a non-arm’s ■ the rental cost for the automobile
length person, the cost is generally equal to the fair ■ any associated costs, such as maintenance contracts,
market value when you bought it, including options and excess mileage charges, terminal charges less terminal
GST/HST or PST. credits, and the GST/HST and PST that you pay to the
Specialized equipment you add to the automobile to meet lessor under the leasing contract
the requirements of a disabled person or for employment Note
(such as cellular phones, two-way radios, heavy-duty Leasing costs do not include liability and collision
suspension, and power winches) are not considered to be insurance costs.
part of the automobile’s cost for purposes of calculating the
standby charge. 2) 30 day periods
When you divide the total days available by 30, round off
If you operate a fleet or pool of automobiles, go to the the result to the nearest whole number if it is more than
heading “Fleet operations” below. one.
2) 30 day periods Examples:
When you divide the total days available by 30, round off 20 days ÷ 30 = 0.67 (do not round off)
the result to the nearest whole number if it is more than
one. 130 days ÷ 30 = 4.33 (round to 4)

Examples: 135 days ÷ 30 = 4.50 (round to 4)

20 days ÷ 30 = 0.67 (do not round off) 140 days ÷ 30 = 4.67 (round to 5)
130 days ÷ 30 = 4.33 (round to 4) 3) Personal kilometres
135 days ÷ 30 = 4.50 (round to 4) See the section on “Personal driving (personal use)” on
page 9.
140 days ÷ 30 = 4.67 (round to 5)
4) Reimbursements
3) Personal kilometres A reimbursement is an amount you receive from your
See the section on “Personal driving (personal use)” on employee to repay you for some of your automobile costs.
page 9. The amount the employee reimburses you may be used to
4) Reimbursements reduce the employee’s taxable benefit.
A reimbursement is an amount you receive from your
employee to repay you for some of your automobile costs. Lump-sum lease payments
The amount the employee reimburses you may be used to Lump-sum amounts you pay the lessor at the beginning or
reduce the employee’s taxable benefit. end of a lease that are not a payment to buy the automobile
will affect the standby charge for the automobile.
Fleet operations Prorate the lump-sum payment you make at the beginning
You may operate a fleet or pool of automobiles from which of a lease over the life of the lease and add it to the leasing
an employee uses several automobiles during the year. If cost.
you assign an automobile to an employee from a fleet or
pool on a long-term or exclusive basis, the cost of the If you make a lump sum payment at the end of a lease, we
automobile you have assigned to the employee should be consider it to be a terminal charge. This means your lease
used when you calculate their standby charge. costs should have been higher and the standby charge for
the automobile has been understated.
However, if the fleet is mostly the same or if you group it
into a few similar groups, you can calculate the standby In this situation, you can use one of the following methods:
charge based on the average cost of the group from which ■ add the terminal charge to the lease costs in the year you
you provide the automobile. You and your employee have end the lease
to agree to this.
■ prorate the payment over the term of the lease and
For more information on grouping automobiles by average amend the T4 or T4A slip of the employee who used the
cost, see Interpretation Bulletin IT-63R, Benefits, Including automobile, as long as they agree and can still ask for an
income tax adjustment for the years in question

canada.ca/taxes 11
Each employee can then write to any tax services office or Operating expenses do not include:
tax centre and ask us to adjust their income tax and benefit
■ interest
returns for those years.
■ capital cost allowance for an automobile you own
A lump sum payment you receive from the lessor at the
end of a lease is considered to be a terminal credit. When ■ lease costs for a leased automobile
this happens, the standby charge for the automobile has
been overstated since the lease costs should have been ■ parking costs, highway or bridge tolls
lower. In this situation, you can use one of the following If you pay any amount of operating expenses, you have to
methods: determine the operating expense benefit by using either the
■ deduct the terminal credit from the lease costs in the year optional or fixed rate calculation.
you end the lease
Optional calculation
■ amend the T4 or T4A slip of the employee who used the You can choose this method to calculate the automobile’s
automobile and provide a letter explaining the reduction, operating expense benefit if all of the following conditions
as long as the employee agrees and can still ask for an apply:
income tax adjustment for the years in question
■ you include a standby charge in your employee’s income
Each employee can then write to any tax services office or
tax centre and ask us to adjust their income tax and benefit ■ your employee uses the automobile more than 50% of the
returns for those years. distance driven in the course of their office or
employment
Whichever method you use when you make or receive a
lump-sum payment at the end of the lease, include the ■ your employee notifies you in writing before the end of
GST/HST and PST. the tax year to use this method
If all of these conditions are met, calculate the operating
Employees who sell or lease automobiles expense benefit of the automobile at half of the standby
You can modify the calculation of the standby charge for charge before deducting any payments (reimbursements)
individuals you employ to sell or lease automobiles if all of your employee or a person related to your employee
the following conditions apply: makes. In some cases, this optional calculation may result
■ you employ the individual mainly to sell or lease in a higher benefit amount than the fixed rate calculation.
automobiles Note
■ you made an automobile you own available to that For 2020 and 2021, employees may use the optional
individual or to someone related to that individual calculation method if they met the conditions to use it in
2019 and they have the same employer. For more
■ you acquired at least one automobile during the year information, go to canada.ca/taxes-auto-motor-benefits.
You can choose the rate of 1.5% instead of 2% for the
automobile’s cost to you, and calculate your automobile Fixed rate calculation
cost as the greater of the following two amounts: The fixed rate for 2021 is 27¢ per kilometre of personal use
(including the GST/HST and PST).
■ the average cost of all new automobiles you acquired in
the year to sell or lease If the employee’s main source of employment is selling or
leasing automobiles, the fixed rate for 2021 is 24¢ per
■ the average cost of all automobiles you acquired in the kilometre of personal use (including the GST/HST and
year to sell or lease PST).
Note Rates for previous tax years can be found in older versions
The cost of an automobile is generally equal to its fair of this guide or in section 7305.1 of the Income Tax
market value at the time of acquisition, including Regulations.
GST/HST and PST.
Note
Calculating an operating expense benefit When you use the fixed rate calculation, you still have to
keep records of this benefit.
When you (or a person related to you) provide an
automobile to an employee and pay for the operating
Reimbursement for operating expenses
expenses related to personal use (including the GST/HST
If the employee reimburses you in the year or no later than
and PST), this payment is a taxable benefit for the
45 days after the end of the year for all actual operating
employee.
expenses (including the GST/HST and PST) attributable to
Operating expenses include: personal use, you do not have to calculate an operating
expense benefit for the year.
■ gasoline and oil
If the employee reimburses you for part of the automobile’s
■ maintenance charges and repair expenses, less insurance
operating expenses in the year or no later than 45 days after
proceeds
the end of the year, deduct the payment from the operating
■ licences and insurance expense benefit that you calculate.

12 canada.ca/taxes
 2) Calculate the personal portion of the operating expenses
Example that he paid to a third party as follows:
In 2021, you provided your employee with an automobile.
She drove 30,000 kilometres during the year, with 12,000 km × $1,500 = $500
10,000 kilometres for personal use. 36,000 km
3) Calculate your employee’s taxable operating expense
You paid $3,000 in costs associated with maintenance,
licences, and insurance. benefit by subtracting the amount you calculated in step 2
from the amount you calculated in step 1, as follows:
Calculate the part of the operating expenses that relates to
her personal use of the automobile as follows: $3,240 – $500 = $2,740

10,000 km × $3,000 = $1,000

30,000 km Benefit for motor vehicles not defined
If she reimbursed you for the total amount of $1,000 in as an automobile
the year, or no later than 45 days after the end of the year,
Even if the vehicle you provide to your employee is not
you do not have to calculate an operating expense benefit
included in the definition of automobile on page 8, there is
for her.
still a taxable benefit for the employee for their personal
However, if she reimbursed you for only $800 of the driving.
expenses you paid in the year, or no later than 45 days after
You have to reasonably estimate the fair market value of
the end of the year, the operating expense benefit is $2,000,
your employee’s personal use of your motor vehicle,
calculated as follows:
including the GST/HST and PST. A reasonable estimate is
10,000 km × 27¢ = $2,700 considered to be the amount an employee would have had
to pay in an arm’s length transaction for the use of
$2,700 – $800 = $1,900 comparable transportation. It includes items such as the
cost of leasing a comparable vehicle and any other related
operating costs. For more information, go to paragraph 23
Operating expenses paid by employee to third party in Interpretation Bulletin IT-63R, Benefits, Including
If you provide an automobile to an employee and you Standby Charge for an Automobile, from the Personal Use
require your employee to pay a third party for part or all of of a Motor Vehicle Supplied by an Employer – After 1992.
the operating expenses, such as gas or oil changes,
(including the GST/HST and PST) in the year, Although other methods of calculating the value of your
administratively, we will allow you to deduct the portion of employee’s taxable motor vehicle benefit are acceptable, the
the expenses paid by the employee that are attributable to CRA generally accepts that the employment benefit arising
personal use from the operating expense benefit that you from the employee’s personal use of the vehicle will be
calculated. Your records have to show that the employee considered reasonable if it is calculated using the rates
paid the expenses directly to the third party. shown under “Reasonable allowance rates” on page 14.
Notes Note
The portion of the operating expenses that relates to The standby charge and operating expense benefit
personal use is the percentage obtained by dividing the calculations should not be used.
number of personal kilometres by the total number of Depending on how your motor vehicle is used by your
kilometres driven by the employee during the year while employee and the conditions that you place on the use of it,
the automobile was available to the employee. you may be able to calculate your employee’s taxable
Excess amounts cannot be deducted from the employee’s benefit using the Motor vehicle home at night policy
standby charge that you calculated. below.

Example Motor vehicle home at night policy

In 2021, you provided your employee with an automobile. Administratively, you can calculate the taxable benefit for
He drove 36,000 kilometres during the year, your employee’s personal use of the motor vehicle between
12,000 kilometres of which were for personal use. home and work using the rates shown under “Fixed rate
calculation” on page 12 as long as your employee meets all
You paid $3,000 in associated insurance and maintenance of the following conditions:
during the year. Your employee paid $1,500 for gas and oil
changes. He did not reimburse you for any of your costs 1. The motor vehicle (as defined on page 9) is not an
and you did not reimburse him for any of his costs. automobile
1) Calculate the employee’s operating expense benefit using 2. You tell your employee in writing that they cannot
the flat-rate calculation as follows: make any personal use of the vehicle, other than
travelling between work and home
12,000 km × 27¢ = $3,240
Note
Your employee will have to maintain full logbooks of the
vehicle’s use as proof that there was no other personal
use.

canada.ca/taxes 13
3. You have valid business reasons for making the Shareholder’s benefit
employee take the vehicle home at night, such as: Report the value of the benefit including GST/HST and
PST that applies using code 028, “Other income” in the
■ it would not be safe to leave tools and equipment at
“Other information” area at the bottom of the T4A slip if
your premises or at a worksite overnight
either of the following applies:
■ your employee is on call to respond to emergencies
■ the shareholder is not an employee
(see Note), and you provide the vehicle so the
employee can respond more effectively to ■ the individual is an employee/shareholder, and you
emergencies provide the vehicle to the individual (or person related to
that individual) in their capacity as a shareholder
4. The motor vehicle is specifically designed or suited for
your business or trade and is essential for the
performance of your employee’s duties. Just Automobile and motor vehicle
transporting the employee to the work location does allowances
not meet the condition of “essential in the performance
of employment duties.” The following examples meet An allowance is any payment that employees receive from
both conditions: an employer for using their own vehicle in connection with
or in the course of their office or employment without
■ The vehicle is designed, or significantly modified, to having to account for its use. This payment is in addition to
carry tools, equipment, or merchandise. Your their salary or wages. An allowance is taxable unless it is
employee has to have the vehicle to do their job based on a reasonable per-kilometre rate.
■ The vehicle, such as a pickup truck or a van, is This section explains common forms of automobile and
suitable for and is consistently used to carry and store motor vehicle allowances.
heavy, bulky, or numerous tools and equipment. It
would be difficult to load and unload the contents. Employees receiving a taxable allowance may be able to
The vehicle is essential to your employee in claim allowable expenses on their income tax and benefit
performing their job return. For more information, see “Employee’s allowable
employment expenses,” on page 8.
■ The vehicle is regularly used to carry harmful or
foul-smelling material, such as veterinary samples or Reasonable per-kilometre allowance
fish and game. The vehicle is essential to your
employee in performing their job If you pay your employee an allowance based on a
per-kilometre rate that is considered reasonable, do not
■ Your employee is on call for emergencies (see Note), deduct CPP contributions, EI premiums, or income tax.
and has to use a vehicle which:
The per-kilometre rates that we usually consider reasonable
– is a clearly marked emergency-response vehicle are the amounts prescribed in section 7306 of the
– is specially equipped to respond rapidly Income Tax Regulations. Although these rates represent the
maximum amount that you can deduct as business
– is designed to carry specialized equipment to the expenses, you can use them as a guideline to determine if
scene of an emergency the allowance paid to your employee is reasonable. The
type of vehicle and the driving conditions are other factors
Note
used to determine whether an allowance is considered to be
We generally consider an emergency to relate either to
reasonable.
the health and safety of the general population or to a
significant disruption to the employer’s operations. We consider an allowance to be reasonable if all of the
following conditions apply:
For examples of situations where transportation to and
from home is considered a taxable benefit, go to canada.ca ■ The allowance is based only on the number of business
/examples-transportation. kilometres driven in a year
■ The rate per-kilometre is reasonable
Reporting automobile or motor vehicle
benefits ■ You did not reimburse the employee for expenses related
to the same use of the vehicle. This does not apply to
Employee’s benefit
situations where you reimburse an employee for toll or
Report the value of the benefit including the GST/HST and ferry charges or supplementary business insurance, if
PST that applies in box 14, “Employment income,” and in you determined the allowance without including these
the “Other information” area under code 34 at the bottom reimbursements
of the employee’s T4 slip.
When your employees fill out their income tax and benefit
Also, report the benefit on a T4 slip when the individual is return, they do not include this allowance in income.
an employee/shareholder and you provide the vehicle to
the individual (or a person related to that individual) in
their capacity as an employee.

14 canada.ca/taxes
Reasonable allowance rates The reasonable per-kilometre allowance paid for travel
For 2021, they are: outside the district is not included in income. The amount
based on a flat-rate paid for travel inside the district is
■ 59¢ per kilometre for the first 5,000 kilometres driven taxable, since it is not based only on the number of
■ 53¢ per kilometre driven after that kilometres for which the vehicle is used in connection with
the employment.
In the Northwest Territories, Yukon, and Nunavut, there is
an additional 4¢ per kilometre allowed for travel. Only the total of the monthly flat-rate allowance has to be
reported in box 14, “Employment income,” and in the
Rates for previous tax years can be found in older versions “Other information” area under code 40 at the bottom of
of this guide or in section 7306 of the Income Tax the employee’s T4 slip.
Regulations.

Per-kilometre allowance rates that are not Reimbursement or advance for travel
considered reasonable expenses
If you pay your employee an allowance based on a A reimbursement is a payment you make to your
per-kilometre rate that is not considered reasonable employees as a repayment for amounts they spent (such as
(because it is either too high or too low), it is a taxable gas and meals) while conducting your business. Generally,
benefit and has to be included in the employee’s income. the employee completes a claim or expense report detailing
the amounts spent. Do not include a reasonable
Flat-rate allowance reimbursement (which is part of your business expenses) in
If you pay your employee an allowance based on a flat rate the employee’s income.
that is not related to the number of kilometres driven, it is a An advance is an amount you give to employees for
taxable benefit and has to be included in the employee’s expenses they will incur on your business. An accountable
income. advance is one that you give to an employee who has to
account for their expenses by producing vouchers and
Combination of flat-rate and reasonable return any amount they did not spend.
per-kilometre allowances Usually, a reimbursement or an accountable advance for
If you pay your employee an allowance that is a travel expenses is not income for the employee receiving it
combination of flat-rate and reasonable per-kilometre unless it represents payment of the employee’s personal
allowances that cover the same use for the vehicle, the total expenses.
combined allowance is a taxable benefit and has to be
included in the employee’s income. Averaging allowances
To comply with the rules on reasonable per-kilometre
Example 1 allowances, employees have to file expense claims with you
You pay an allowance to your employee as follows: on an ongoing basis, starting at the beginning of the year.
■ a flat per-diem rate to offset the employee’s fixed A flat-rate or lump-sum allowance that is not based on the
expenses for each day the vehicle is required number of kilometres driven cannot be averaged at the end
■ a reasonable per-kilometre rate for each kilometre driven of the year to determine a reasonable per-kilometre rate
to offset the operating expenses and then be excluded from the employee’s income.

The flat per-diem rate compensates the employee for some We understand the administrative problems that can result
of the same use on which the reasonable per-kilometre from this. As a result, we are giving you a choice. If you
allowance is based. That is, the fixed expenses incurred by make accountable advances to employees for vehicle
the employee to operate the vehicle. expenses, you do not have to include them in the
employee’s income if all of the following conditions are
The combined amount is considered one allowance and met:
therefore taxable, since it is not based only on the number
of kilometres the vehicle is used for employment purposes. ■ there is a pre-established per-kilometre rate that is not
more than a reasonable amount
Example 2 ■ the rate and the advances are reasonable under the
You pay an allowance to your employee as follows: circumstances
■ a flat-rate per month for travel inside the employment ■ you document this method in the employee’s record
district
■ no other provision of the Income Tax Act requires you to
■ a reasonable per-kilometre rate for employment-related include the advances in the employee’s income
travel outside the employment district
Employees have to account for the business kilometres they
Since the flat-rate allowance does not cover any of the same travelled and any advances they received. They have to do
use of the vehicle on which the reasonable per-kilometre so on the date their employment ends in the year, or by
allowance is based, the allowances are considered December 31, whichever is earlier.
separately.

canada.ca/taxes 15
At that time, you have to pay any amounts you owe the Board and lodging
employee and the employee has to repay any amount over
You may give your employee board and lodging which
actual expenses. Where no repayment occurs, you cannot
means that you provide him or her with accommodations
simply report the excess advances on the employee’s
and, in some cases, food. If you provide only meals to an
T4 slip.
employee, see “Meals,” on page 27.
For more information on vehicle allowances, see
If you provide free lodging, or free board and lodging, to
Interpretation Bulletin IT-522R, Vehicle, Travel and Sales
an employee, the employee receives a taxable benefit. As a
Expenses of Employees.
result, you have to add to the employee’s salary the fair
market value of the board and lodging you provide. Report
Reducing tax deductions at source on this amount in box 14, “Employment income,” and in the
automobile or motor vehicle allowances “Other information” area under code 30 at the bottom of
In many cases, allowances that are not based only on a the employee’s T4 slip.
reasonable per-kilometre rate can later be substantially If you provide subsidized lodging, or subsidized board
offset by the employees’ expense deductions on their and lodging, to an employee, the employee receives a
income tax and benefit returns. In these situations, taxable benefit. As a result, you have to add to the
employees can ask to reduce their tax deductions on their employee’s salary the fair market value of the board and
remuneration by filling out and sending in a Form T1213, lodging you provide, minus any amount the employee
Request to Reduce Tax Deductions at Source, or a written paid. Report this amount in box 14, “Employment income,”
request to any tax services office along with the following and in the “Other information” area under code 30 at the
information: bottom of the employee’s T4 slip.
■ the type of employment for which the employee will
receive the allowance Exceptions to the rules
■ an estimate of the total vehicle allowances the employee There are certain situations that can affect the value of the
will receive in the year taxable benefit your employee gets if you provide free or
subsidized board and lodging. The exceptions are as
■ an estimate of the business kilometres the employee will follows:
drive in the year
■ If you provide board and/or lodging allowances to
■ an estimate of the employee’s vehicle expenses for the players on sports teams or members of recreation
year programs, see the next section
■ the amount for which the employee is requesting the ■ If you provide board, lodging and/or transportation to
waiver an employee who works at a special work site or a
If you have a number of employees in the same situation, remote location, see “Board, lodging, and
you can get a bulk waiver for the group. This way, every transportation – Special work sites and remote work
employee does not have to make an individual request. locations,” on page 17

Reporting automobile or motor vehicle Board and lodging allowances paid to

allowances on the T4 slip players on sports teams or members
If you provide an allowance that we consider to be taxable of recreation programs
to your employee, you have to enter the yearly total of this
You can exclude up to $377 (for 2021) per month from
allowance in box 14, “Employment income,” and in the
income for a board and lodging allowance for a participant
“Other information” area under code 40 at the bottom of
or member of a sports team or recreational program if all of
the employee’s T4 slip. Do not report any amount that we
the following conditions are met:
do not consider to be taxable.
■ you are a registered charity or a non-profit organization
Chapter 3 – Other benefits and ■ participation with, or membership on the team or in the
program is restricted to persons under 21 years of age
allowances
■ the allowance is for board and lodging for participants or
members that have to live away from their ordinary
Aircraft Benefits place of residence
If you give your employee access to an aircraft for personal
purposes, the employee receives a taxable benefit. You have ■ the allowance is not attributable to any services, such as
to add to the employee’s salary the fair market value of the coaching, refereeing, or other services to the team or
benefit, minus any amount the employee paid. The value of program
the benefit is determined on the basis of what is reasonable Do not report the excluded income on a T4 slip.
in relation to the facts of the case and the manner in which
the aircraft is used.
For more information about aircraft benefits, go
to canada.ca/taxable-benefit-personal-use-aircraft.

16 canada.ca/taxes
Board, lodging, and transportation – ■ The board and lodging, or the allowance (not in excess of
a reasonable amount) for board and lodging, you
Special work sites and remote work provided to the employee had to have been for a period
locations of at least 36 hours. This period can include time spent
It is possible for an employee to work at a location that is travelling between the employee’s principal place of
both a special work site and a remote work location. residence and a special work site
However, the benefit can only be excluded from the Note
employee’s income once. You can only exclude from income an allowance (not in
Note excess of a reasonable amount) paid to your employee
If the special work site is in a prescribed zone, see for board and lodging if they incurred the expense.
“Board, lodging, and transportation at a special work
site in a prescribed zone,” on page 36. Transportation
You can exclude from income the value of free or
Special work sites subsidized transportation, or an allowance (not in excess of
a reasonable amount) for transportation expenses, that you
Generally, a special work site is an area where temporary provide to an employee who works at a special work site if
duties are performed by an employee who keeps a all of the following conditions are met:
self-contained domestic establishment at another location
as their principal place of residence. Because of the distance ■ the free or subsidized transportation, or the allowance,
between the two areas, the employee is not expected to was for transportation between the special work site and
return daily from the work site to their principal place of your employee’s principal place of residence
residence.
■ the employee’s duties required them to be away from
Note their principal place of residence or be at the special
A self-contained domestic establishment (SCDE) is a work site for a period of at least 36 hours
house, an apartment, or other similar place of residence
■ you (or a third party) provided board and lodging, or a
where a person usually sleeps and eats. It is generally a
reasonable allowance for board and lodging, to your
living unit with restricted access that contains a kitchen,
employee for that period
bathroom, and sleeping facilities. The SCDE must be
separate from any other living unit in the same building.
A room in a hotel, dormitory, boarding house, or Form TD4, Declaration of Exemption – Employment at
bunkhouse is not ordinarily considered to be a SCDE. a Special Work Site
If all of the conditions listed under “Board and lodging”
Usually, the GST/HST and PST applies on meals and noted above are met, you and the employee should fill out
accommodations you provide to an employee. In certain Form TD4, Declaration of Exemption – Employment at a
cases, such as long-term residential accommodation of one Special Work Site. This allows you to exclude the benefit or
month or more, no GST/HST and PST applies. Where the allowance from the employee’s income. If you fill out
GST/HST and PST does apply, include it in the value of the Form TD4, do not include the amounts in box 14,
benefit. “Employment income,” or in the “Other information” area
under code 30 at the bottom of the employee’s T4 slip.
Board and lodging at a special work site After you fill out Form TD4 with the employee, keep it with
You can exclude from income the value of board and your payroll records.
lodging, or an allowance (not in excess of a reasonable
If all of the above-noted conditions are not met, do not fill
amount) for board and lodging, that you provide to an
out Form TD4. Treat the total amounts as part of the
employee who works at a special work site if all of the
employee’s income. Make the necessary deductions and
following conditions are met:
report the amounts on the employee’s T4 slip. This also
■ The employee’s duties required him or her to be away applies to any part of an allowance for board, lodging, and
from their principal place of residence or to be at the transportation that is more than a reasonable amount.
special work site
■ The employee had to work at a special work site where Remote work locations
the duties performed were of a temporary nature We usually consider a work location to be remote when it is
80 kilometres or more from the nearest established
■ The employee kept, at another location, a self-contained community with a population of at least 1,000 people.
domestic establishment as their principal place of
residence: A location is considered an established community if it has
essential services or those services are available within a
– that, throughout the period, was available for the reasonable commuting distance. Essential services may
employee’s occupancy, and the employee did not rent include access to:
it to any other person
■ basic food store
– to which, because of distance, the employee could not
reasonably be expected to return daily from the special ■ basic clothing store, with merchandise in stock (not a
work site mail-order outlet)
■ accommodation

canada.ca/taxes 17
■ certain medical services Cellular phone and Internet services
■ certain educational facilities If you provide your employee with a cell phone (or other
handheld communication device) that you own, to help
Board and lodging at a remote work location carry out their employment duties, the fair market value
You can exclude from income the value of board and (FMV) of the cell phone or device is not a taxable benefit.
lodging, or an allowance (not in excess of a reasonable However, if you reimburse your employee for the cost of
amount) for board and lodging that you provide to an their own cell phone (or other handheld communication
employee who works at a remote work location, if all of device), the FMV of the cell phone or device is considered a
the following conditions are met: taxable benefit to the employee. This is the case even if the
■ the employee could not reasonably be expected to set up employee used, lost, or damaged the cell phone or device
and maintain a self-contained domestic establishment while carrying out their employment duties.
because of the remoteness of the location and the If you pay for, or reimburse the cost of an employee’s cell
distance from any established community phone service plan, or Internet service at home to help
■ you did not provide a self-contained domestic carry out their employment duties, the portion used for
establishment for the employee employment purposes is not a taxable benefit.

■ the board and lodging, or allowances (not in excess of a If part of the use of the cell phone or Internet service is
reasonable amount) for board and lodging, were for a personal, you have to include the value of the personal use
period of at least 36 hours when one of the following in your employee’s income as a taxable benefit. The value
situations applied: of the benefit is based on the FMV of the service, minus any
amounts your employee reimburses you. You can only use
– the employee had to be away from their principal place your cost to calculate the value of the benefit if it reflects the
of residence because of their duties FMV.
– the employee had to be at the remote work location For cellular phone service only, we do not consider your
employee’s personal use of the cellular phone service to be
Transportation a taxable benefit if all of the following apply:
You can exclude from income the value of free or
subsidized transportation, or an allowance (not in excess of ■ the plan’s cost is reasonable
a reasonable amount) for transportation expenses, that you ■ the plan is a basic plan with a fixed cost
provide to an employee who works at a remote work
location if all of the following conditions are met: ■ your employee’s personal use of the service does not
result in charges that are more than the basic plan cost
■ The employee’s duties required them to be away from
their principal place of residence or to be at the remote You, as the employer, are responsible for determining the
work location for a period of at least 36 hours percentage of employment use and the FMV. You have to
be prepared to justify your position if we ask you to do so.
■ The free or subsidized transportation, or the allowance,
was for transportation between the remote work location Note
and any location in Canada. If the remote work location If you give your employee an allowance for cellular
is outside Canada, you can exclude the allowance for phone or Internet services, the allowance must be
transportation between that location and any location in included in the employee’s income.
Canada or outside Canada
■ You (or a third party) provided board and lodging, or a
Child care expenses
reasonable allowance for board and lodging, to your Child care is not taxable only if all of the following
employee for that period conditions are met:
If you need help determining whether a location qualifies ■ the services are provided at your place of business
as remote, see Interpretation Bulletin IT-91R, Employment
■ the services are managed directly by you
at Special Work Sites or Remote Work Locations.
■ the services are provided to all of the employees at
Form TD4, Declaration of Exemption – Employment at minimal or no cost
a Special Work Site
■ the services are not available to the general public, only
When there is an exemption for board, lodging, or to employees
transportation allowances you pay to employees who work
at a remote work location, do not fill out Form TD4. If not all of the conditions are met, the taxable benefit is the
fair market value (FMV) minus any amount that the
Payroll deductions employee pays for the service.
If you exclude a benefit for board, lodging, and When you subsidize a facility operated by a third party in
transportation at a special work site or remote work exchange for subsidized rates for your employees, the
location, it is not a taxable benefit. Do not deduct CPP amount of the subsidy is considered a taxable benefit for
contributions, EI premiums, or income tax. the employee.

18 canada.ca/taxes
Counselling services However, we consider discounts to be taxable in all of the
following situations:
The fees you pay to provide services such as financial
counselling or income tax preparation for an employee are ■ you make a special arrangement with an employee or a
usually considered a taxable benefit. group of employees to buy merchandise at a discount
Employee counselling services are not taxable if they ■ you make an arrangement that allows an employee to
are for one of the following: buy merchandise (other than old or soiled merchandise)
for less than your cost
■ an employee’s re-employment
■ you make a reciprocal arrangement with one or more
■ an employee’s retirement
other employers so that employees of one employer can
■ an employee’s mental or physical health (such as buy merchandise at a discount from another employer
counselling for tobacco, drug, or alcohol abuse, stress
If you determine the discount is taxable or you sell
management or employee assistance programs) or that of
merchandise to your employees below cost, the taxable
a person related to an employee
benefit is the difference between the fair market value of
Note the goods and the price the employees pay.
This does not include amounts for using recreational or
Commissions that sales employees receive on merchandise
sporting facilities and club dues.
they buy for personal use are not a taxable benefit.
Similarly, when life insurance salespeople acquire life
Disability-related employment benefits insurance policies, the commissions they receive are not
If you provide benefits or allowances to an employee who taxable as long as they own the policies and have to make
has a disability, such as transportation costs or attendant the required premium payments. This only applies where
services, the benefits may not be taxable. the income received is not significant and the insurance
policy has no investment component or business use.
Reasonable transportation costs between an employee’s
home and work location (including parking near that Note
location) are not taxable if you pay them to or for an This policy does not apply to discounts on services.
employee to whom either of the following applies:
■ Is blind (For more information, see Guide RC4064,
Education benefits
Disability-Related Information.) If you provide education benefits to your employee, it may
be a taxable benefit to the employee in certain
■ Has a severe and prolonged mobility impairment, which circumstances.
markedly restricts the individual’s ability to perform a
basic activity of daily living (generally, someone who is If you provide education benefits to a person other than the
eligible to claim the disability tax credit) employee, such as employee’s family member, you do not
have to include the value of the benefit in the employee’s
These transportation costs can include an allowance for income as long as you deal at arm’s length with the
taxis or specially designed public transit and parking that employee and the education benefit is not a replacement for
you provide or subsidize for these employees. salary, wages or other remuneration. Although
You may have employees with severe and prolonged scholarships, bursaries, and free tuition for family members
mental or physical impairments. If you provide reasonable are no longer a taxable benefit to employees, the benefit
benefits for attendants to help these employees perform may be income to the family member. For more
their duties of employment, these benefits are not taxable information, see “Family members” on page 20.
for the employee. The benefits can include readers for
persons who are blind, signers for persons who are deaf, Educational allowances for children
and coaches for persons who are intellectually impaired. If you pay any amounts to an employee as an educational
allowance for the employee’s child, you have to include
Payroll deductions these amounts in the employee’s income for the year.
If you exclude a disability-related employment benefit from However, if the employee and their family have to live in a
income, it is not a taxable benefit. Do not deduct CPP specific location away from their home and the schools in
contributions, EI premiums, or income tax. the area do not meet the educational needs of the
employee’s children, the educational allowance may not be
Discounts on merchandise and taxable if all of the following conditions are met:
commissions from personal purchases ■ the education provided is in the official language of
If you sell merchandise to your employee at a discount, the Canada primarily used by the employee
benefit they get from this is not usually considered a ■ the school is the closest suitable one available in that
taxable benefit. official language
■ the child is in full-time attendance at the school
■ the subsidy you provide is reasonable

canada.ca/taxes 19
Subsidized school services If you paid for, or reimbursed, education amounts that are
Subsidized school services are generally taxable. However, reported on either a T4 or T4A slip, these amounts may be
in remote areas, employers are often responsible for eligible for the scholarship exemption. The individual may
essential community services that municipalities usually be able to fully exclude from their income tuition fees,
provide. scholarships, fellowships, and bursaries they received from
you.
If you provide free or subsidized school services in remote
areas for your employee’s children, the employee does not Family members
receive a taxable benefit. Do not deduct CPP contributions, If you offer a program that provides free or reduced tuition
EI premiums, or income tax on these amounts. fees to the family members of your employees, do not
Note include the value of any benefit the employee’s family
This does not include an educational allowance or member receives in your employee’s income unless:
educational costs you pay directly to your employee, as ■ the benefit is provided as a substitute for salary, wages or
explained elsewhere in this section. other remuneration
■ you do not deal with the employee at arm’s length
Scholarships, bursaries, tuition, and training
Employee Instead, report the FMV of the scholarship or bursary on a
You may provide an employee, or former employee, with a T4A slip for the family member. If a family member meets
scholarship or bursary on the condition that the employee certain criteria, they may not have to include the amount in
returns to employment with you on completing the course. income on their income tax and benefit return.
In this situation, the amount of the scholarship or bursary is The same applies if you are an educational institution
considered to be employment income for the employee or offering free or discounted tuition to your employees’
former employee. family members.
You have to report on a T4 slip any scholarships, If you get any questions, you can refer them to the Federal
fellowships, or bursaries you gave to an employee if they Income Tax and Benefit Guide.
primarily benefit the employee. If you get any questions
from your employee about the income, you can refer him or For more information on scholarships or bursaries
her to Income Tax Folio S1-F2-C3, Scholarships, Research provided in employment situations, see Income Tax
Grants and Other Education Assistance or to Guide 5000-G, Folio S1-F2-C3, Scholarships, Research Grants and Other
Federal Income Tax and Benefit Guide. Education Assistance.

■ Specific employment-related training

We generally consider that courses taken to maintain or Employment insurance premium
upgrade employment-related skills are mainly for your rebate
benefit when it is reasonable to assume that the employee
As an employer, you may be eligible for a reduction in the
will resume their employment for a reasonable period of
employer EI premium rate that you use to calculate your share
time after they finish the course.
of the EI premiums if you offer income protection coverage,
For example, tuition fees and other associated costs such such as a wage loss replacement plan or other income
as books, meals, travel, and accommodation that you pay maintenance plan, to your employees that reduce the EI benefits
for courses leading to a degree, diploma, or certificate in payable to an employee. For more information, go to canada.ca
a field related to your employee’s current or future /cra-reduce-premium-rate.
responsibilities in your business are not a taxable benefit.
If you are granted an EI premium reduction, you will
■ General employment-related training calculate your employer’s EI premiums using a rate that is
We generally consider that other business-related lower than the standard employer rate of 1.4 times the
courses, although not directly related to your own employees’ EI premiums.
business, are taken mainly for your benefit.
You have to return 5/12 of any savings to your employees
For example, fees you pay for stress management, in the year in which you received the EI premium
employment equity, first aid, and language courses are reduction, or within the first four months of the following
not a taxable benefit. year. This savings can either be given to your employee in
cash, such as a cash allowance or a cash rebate, or indirectly
■ Personal interest training through increased employer contributions to an employee’s
We consider that courses for personal interest or health and welfare trust, group sickness or accident
technical skills not related to your business are taken insurance plan, private health services plan, or in any other
mainly for the employee’s benefit and, therefore, are a manner. These indirect benefits will only be tax-free (i.e. not
taxable benefit. included in the employee’s employment income) if they are
given to the employee in the form of a benefit specifically
Scholarship and tuition fees exempt from taxation under paragraph 6(1)(a) of the
If you paid for, or reimbursed, your employee’s tuition fees Income Tax Act.
and there is no taxable benefit according to these
guidelines, the tuition fees will not qualify for the tuition
tax credit. You should inform your employee of this.

20 canada.ca/taxes
 Note clearly defined criteria, a nomination and evaluation
If the benefit is taxable, you must include it in your process, and a limited number of recipients.
employee’s income in the year the employee received it.
An award given to your employees for performance-related
For more information, see “Benefits chart” on page 44.
reasons (such as performing well in the job they were hired
to do, exceeding production standards, completing a
Gifts, awards, and long-service awards project ahead of schedule or under budget, putting in extra
A gift or an award that you give an employee is a taxable time to finish a project, covering for a sick
benefit from employment, whether it is cash, near-cash, or manager/colleague) is considered a reward and is a taxable
non-cash. However, we have an administrative policy that benefit for the employee.
exempts non-cash gifts and awards in some cases. If you give your employee a non-cash gift or an award for
Cash and near-cash gifts or awards are always a taxable any other reason, this policy does not apply and you have
benefit for the employee. A near-cash item is one that to include the fair market value of the gift or award in the
functions as cash, such as a gift certificate or gift card, or an employee’s income.
item that can be easily converted to cash, such as gold The gifts and awards policy does not apply to cash and
nuggets, securities, or stocks. For more information, see near-cash items or to gifts or awards given to non-arm’s
“Rules for gifts and awards” and “Policy for non-cash gifts length employees, such as your relatives, shareholders, or
and awards,” on page 21. people related to them.
For more information on gifts and awards outside our
Example of a near-cash gift or an award policy, go to canada.ca/taxes-gifts and click on “Gifts and
You give your employee a $100 gift card or gift certificate to awards outside our policy.”
a department store. The employee can use this to purchase
whatever merchandise or service the store offers. We
consider the gift card or gift certificate to be an additional Value
remuneration that is a taxable benefit for the employee Use the fair market value (FMV) of each gift to calculate
because it functions in the same way as cash. the total value of gifts and awards given in the year, not its
cost to you. You have to include the value of the GST/HST
Examples of non-cash gifts or awards and PST in the FMV.
You give your employee tickets to an event on a specific
date and time. This may not be a taxable benefit for the Policy for non-cash gifts and awards
employee since there is no element of choice, if the other You may give an employee an unlimited number of
rules for gifts and awards are met. non-cash gifts and awards with a combined total value of
You give your employee a voucher (which may be a ticket $500 or less annually. If the FMV of the gifts and awards
or a certificate) that entitles the employee to receive an item you give your employee is greater than $500, the amount
for a set value at a store. For example, you may give your over $500 must be included in the employee’s income. For
employees a voucher for a turkey valued up to $30 as a example, if you give gifts and awards with a total value of
Christmas gift, and for convenience, you arrange for your $650, there is a taxable benefit of $150 ($650 – $500).
employees to go to a particular grocery store and exchange Items of small or trivial value do not have to be included
the voucher for a turkey. The employees can only use the when calculating the total value of gifts and awards given
voucher to receive a turkey valued up to $30 (no in the year for the purpose of the exemption. Examples of
substitutes). items of small or trivial value include:
Vouchers and event tickets are generally considered ■ coffee or tea
non-cash gifts and awards.
■ T-shirts with employer’s logos
A gift card or gift certificate to a movie theatre is not
considered an event ticket. It is considered a near-cash gift ■ mugs
or an award. With a gift card or gift certificate to a movie
■ plaques or trophies
theatre, your employee can choose which movie to see and
when to see it, or they can use the card or certificate at an
arcade or concession stand. Long-service awards
As well as the gifts and awards in the policy stated above,
you can, once every five years, give your employee a
Rules for gifts and awards non-cash long-service or anniversary award valued at $500
or less, tax free. The award must be for a minimum of five
A gift has to be for a special occasion such as a religious
years’ service, and it has to be at least five years since you
holiday, a birthday, a wedding, or the birth of a child.
gave the employee the last long-service or anniversary
An award has to be for an employment-related award. Any amount over the $500 is a taxable benefit.
accomplishment such as outstanding service, or employees’
If it has not been at least five years since the employee’s last
suggestions. It is recognition of an employee’s overall
long-service or anniversary award, then the award is a
contribution to the workplace, not recognition of job
taxable benefit. For example, if the 15 year award was given
performance. Generally, a valid, non-taxable award has
at 17 years of service, and then the next award is given at
20 years of service, the 20 year award will be a taxable

canada.ca/taxes 21
benefit, since five years will not have passed since the A lump-sum premium is a premium for insurance on an
previous award. individual’s life where all or part of the premium is for
insurance for a period that extends more than 13 months
The $500 exemption for long-service awards does not affect
after the payment of the premium (or more than 13 months
the $500 exemption for other gifts and awards in the year
after the time the premium became payable, if it is paid
you give them. For example, you can give an employee a
after it became payable).
non-cash long-service award worth $500 in the same year
you give him or her other non-cash gifts and awards worth
$500. In this case, there is no taxable benefit for the Calculating the benefit
employee. If the premiums are paid regularly and the premium rate
for each individual does not depend on age or gender, the
Note
benefit is:
If the value of the long-service award is less than $500,
you cannot add the shortfall to the annual $500 ■ the premiums payable for term insurance on the
exemption for non-cash gifts and awards. individual’s life
You can answer a series of questions on our Web site to plus
help you determine if there is a taxable benefit. For more
■ the total of all sales taxes and excise taxes, excluding
information, go to canada.ca/taxes-gifts, select “Gifts,
GST/HST that apply to the individual’s insurance
awards and long-service awards,” and then select “Rules
coverage
for gifts and awards.”
■ any provincial insurance levies or sales tax (8% for
Awards from a manufacturer Ontario, 7% for Manitoba, and 9% for Quebec) that
employers have to pay on some insurance premiums
If a manufacturer of goods gives cash awards or non-cash
awards to the dealer of the goods, the manufacturer does minus
not have to report the awards on an information slip.
■ the premiums and any taxes the employee paid either
However, if the dealer passes on cash awards to an directly or through reimbursements to you
employee, the dealer has to report the cash payment in
box 14, “Employment income,” and in the “Other In any other situation, a detailed calculation is required. For
information” area under code 40 at the bottom of the more information, call 1-800-959-5525.
employee’s T4 slip. If the dealer passes on non-cash awards
to an employee, the dealer may not have to report the Reporting the benefit
awards in the employee’s income if the other conditions of Report the benefit for current employees and employees
the awards policy are met. who are on a leave of absence (such as maternity leave) in
If a manufacturer gives a cash award or a non-cash award box 14, “Employment income,” and in the “Other
directly to the employee of a dealer or other sales information” area under code 40 at the bottom of the
organization, the manufacturer has to report the value of employee’s T4 slip.
the award as a benefit using code 154, “Cash award or prize Except as indicated in the next paragraph, for former
from payer,” in the “Other information” area at the bottom employees or retirees, report the benefit on a T4A slip using
of the T4A slip. code 119 in the “Other information” area, regardless of the
amount. The $500 reporting threshold for T4A slips, which
Group term life insurance policies – is described in Guide RC4157, Deducting Income Tax on
Pension and Other Income, and Filing the T4A Slip and
Employer-paid premiums Summary, does not apply.
This section applies to current, former, and retired
If you are the administrator or trustee of a multi-employer
employees.
plan and you provided taxable benefits under the plan to
Note employees, former employees, or retirees, report the benefit
Premiums you pay for employees’ group life insurance using code 119 in the “Other information” area at the
that is not group term insurance or optional dependant bottom of the T4A slip if it is more than $25.
life insurance are also a taxable benefit.
Note
A group term life insurance policy is one for which the Effective January 2018, employers who pay Group Term
only amounts payable by the insurer are policy dividends, Life Insurance premiums on behalf of retirees, when it’s
experience rating refunds, and amounts payable on the the only income reported on the T4A slip, are only
death or disability of an employee, former employee, required to report the premium if the amount is greater
retired employee, or their covered dependants. than $50. Your former employee is still responsible for
reporting the amount on his or her personal income tax
Term insurance is any life insurance under a group term
and benefits return.
life insurance policy other than insurance for which a
lump-sum premium has become payable or has been paid.
Life insurance for current employees would usually be term Housing or utilities
insurance, although it is sometimes provided for retired If the accommodation you provide to the employee is in a
employees. prescribed zone, see “Accommodation or utilities provided
by the employer,” on page 35.

22 canada.ca/taxes
If your employee is a member of the clergy or a religious Reporting the benefit
order or a regular minister of a religious denomination, Report the taxable benefit for the utilities in box 14,
they might be entitled to claim a clergy residence “Employment income,” and in the “Other information”
deduction. For more information, see “Clergy residence” on area under code 40 at the bottom of the employee’s T4 slip.
this page. Report the taxable benefit for housing in box 14 and in the
“Other information” area under code 30.
Housing or utilities – benefit
Notes
If you provide an employee, including the superintendent Special rules apply if you pay for utilities (or provide
of an apartment block, with a house, apartment, or similar them) for a member of the clergy. You must add eligible
accommodation rent free or for less than the fair market utilities (electricity, heat, water, and sewer) for clergy
value (FMV) of such accommodation, there is a taxable members to the taxable benefit for housing under
benefit for the employee. code 30. Report all other utilities under code 40.
You have to estimate a reasonable amount for the housing For more information, see “Code 30 – Board and
benefit. It is usually the FMV for the same type of Lodging” in Chapter 2 of Guide RC4120, Employers’
accommodation, minus any rent the employee paid. Guide – Filing the T4 Slip and Summary.
In addition, the amount you pay on behalf of, or reimburse
to your employee for utilities (such as telephone, hydro, Clergy residence
natural gas, water, cable or internet) is also a taxable Clergy residence deduction
benefit. This is the amount that you include in the
If your employee is a member of the clergy, they may be
employee’s income as a utilities benefit.
able to claim a deduction from income for their residence
If the employee occupies the accommodation for at least when filing a personal income tax and benefits return.
one month, the value of the accommodation is usually not
An employee who is a member of the clergy, a regular
subject to the GST/HST.
minister, or a member of a religious order can claim the
clergy residence deduction if the employee is in one of the
Special circumstances that reduce the value of a following situations:
housing benefit
The following two factors may reduce the value of a ■ in charge of, or ministers to, a diocese, parish, or
housing benefit you provide to your employee: congregation

■ Suitability of size ■ engaged only in full-time administrative service by

Your employee may have to occupy an accommodation appointment of a religious order or denomination
that is larger than they need (such as a single person in a To claim the deduction, the employee has to fill out parts A
three-bedroom house). To calculate the taxable housing and C of Form T1223, Clergy Residence Deduction. You
benefit, you can reduce the value of the accommodation have to fill out Part B and sign the form to certify that this
to equal the value of accommodation that is appropriate employee has met the required conditions. The employee
to your employee’s needs (in this case, a one or two does not have to file the form with their income tax and
bedroom apartment or house). benefit return, but has to keep it in case we ask to see it.
Note
If the accommodation you provide is smaller than your Reducing remuneration from which you have to deduct
employee needs, we cannot allow any reduction in income tax and CPP
value. Employer provided or paid – benefit
If you provide your employee with free or low-rent
■ Loss of privacy and quiet enjoyment
accommodation, do not include the accommodation and
If the accommodation you provide to your employee
utilities share of the benefit that is equal to the clergy
contains things like equipment, public access, or storage
residence deduction, in your employee’s income when you
facilities that infringe on your employee’s privacy or
calculate the income tax and CPP contributions to deduct as
quiet enjoyment of the accommodation, you can reduce
long as your employee does both of the following:
the value of the housing benefit. The reduction has to
reasonably relate to the degree of disturbance that affects ■ gives you a completed Form T1223, Clergy Residence
your employee. Deduction
These two factors apply in the above order. If both ■ tells you in writing they intend to claim the clergy
circumstances apply to an accommodation, you should first residence deduction and tells you the amount of the
reduce the value to equal the value of accommodation that deduction that will be claimed
suits your employee’s needs. Then, you should apply any
Employee owned or rented – allowance
reduction for loss of privacy and quiet enjoyment to that
Your employee may own or rent the accommodation and
reduced value.
pay for utilities either out of their own money or by using
the allowance you paid to him or her. If your employee will
Housing or utilities – allowance be claiming the clergy residence deduction on their
If you give your employee an allowance to pay for rent or personal income tax and benefits return, they may get a
utilities, include the allowance in your employee’s income letter of authority from a tax services office to reduce the
as a taxable housing and/or utilities benefit. income on which you have to deduct tax and CPP. When

canada.ca/taxes 23
your employee provides you with a letter of authority from For more information on employee-pay-all plans, go
a tax services office, reduce the income by the amount to canada.ca/cpp-ei-explained and choose “Wage Loss
stated in the letter. Replacement Plans” or see Interpretation Bulletin IT-428,
Wage Loss Replacement Plans.
Note
Although the clergy residence deduction and the utilities
share of the benefit can be excluded from income for the Group disability benefits – insolvent insurer
purpose of calculating tax deductions and CPP, you still Under subsection 6(17) of the Income Tax Act (ITA), a top
have to report it on your employee’s T4 slip. Special up disability payment includes a payment made by an
rules apply if you pay for utilities (or provide them) for a employer directly to an individual to replace all or part of
member of the clergy. For more information, see the periodic payments that, because of an insurer’s
“Code 30 – Board and Lodging” in Chapter 2 of insolvency, are no longer being made to the individual
Guide RC4120, Employers’ Guide – Filing the T4 Slip under a disability policy for which the employer made
and Summary. contributions. This treatment allows the continued
deduction of contributions made by the employee to be
For more information, see Interpretation Bulletin IT-141R,
considered in determining the amount to be included in the
Clergy Residence Deduction.
employee’s income from employment under
paragraph 6(1)(f) of the ITA. This applies to any top up
Income maintenance plans and other disability payment made after August 10, 1994.
insurance plans A disability policy is a group disability insurance policy
Employers may offer various types of insurance plans to that provides periodic payments to individuals for lost
employees. The tax treatment of employer-paid premiums employment income.
or contributions to these plans may differ depending on the
nature of the plan, the type of benefits offered, and whether Loans – interest-free and low-interest
the plan is offered to individual employees (a non-group
plan) or a group of employees (a group plan). You may have to include in income any benefit arising
from an interest-free or low-interest loan received, or debt
incurred, by a person because of an office, employment, or
Non-group plans shareholding.
The premium or contribution is a taxable benefit if you pay
it to a non-group plan that is: The benefit is generally calculated as the amount of interest
that the person would have paid on the loan or debt for the
■ a sickness or accident insurance plan year at the prescribed rates (for more information, see
“Prescribed interest rates,” on page 26), minus the amount
■ a disability insurance plan
of interest that they paid on the loan in the year or no later
■ an income maintenance insurance plan than 30 days after the end of the year.
Special rules apply to certain loans or debt and to
Group sickness or accident insurance plans home-relocation loans. For more information, see
Effective January 2013, premiums or contributions you pay “Exceptions,” on this page and “Home-relocation loans,”
to a group sickness or accident insurance plan are a taxable on page 26.
benefit to your employee, unless it is in respect of a
wage-loss replacement benefit payable on a periodic basis Exceptions
(not lump-sum). Examples of plans where the premium is a
A taxable benefit will not arise where a person receives loan
taxable benefit include, but are not limited to, accidental
or incurs a debt because of an office, employment, or
death and dismemberment and critical illness insurance.
shareholding when either of the following occurs:
Include the taxable benefit in box 14, “Employment
■ The interest rate on the loan or debt equals, or is more
income,” and in the “Other information” area under
than, the rate that would have been agreed upon in an
code 40 at the bottom of the employee’s T4 slip. Report the
arm's length transaction at the time the loan or debt
retiree’s taxable benefit using code 028, “Other income” in
arose if the creditor's ordinary business included the
the “Other information” area at the bottom of the T4A slip.
lending of money. This exception does not apply if
someone other than the borrower pays any part of the
Employee-pay-all plans interest from the loan or debt
If the plan is an employee-pay-all plan, any premium you
■ You include all or part of the loan or debt (such as, a loan
pay on behalf of the employee, and any reimbursements
or debt forgiven in whole or in part) in the income of a
made to your employee, are considered taxable benefits. A
person or partnership. Where only part of the loan or
plan is an employee-pay-all plan where your employee is
debt has been included in income, an interest benefit
contractually responsible for paying the premiums to the
must still be calculated for the portion of the loan or debt
third party that administers the plan, even where the plan
that remains outstanding
allows you to pay the premiums on the employee’s behalf
and include the value of the premiums in your employee’s
income.

24 canada.ca/taxes
 Note after the end of the year. During the year, a company
Arm’s length refers generally to persons that are not related to you paid $1,000 interest on the loan for Joshua.
related. For more information, see Income Before the end of the same year, Joshua repaid the $1,000 to
Tax Folio S1-F5-C1, Related Persons and Dealing at the company.
Arm's Length.
Calculate the benefit to include in his income as follows:
Loans received because of employment a) Prescribed rate × loan amount for the year:
An employee receives a taxable benefit if you give any 3% × $150,000 × 1/4 = $1,125
person or partnership a loan because of the employee's
4% × $150,000 × 2/4 = $3,000
current, previous, or intended office or employment. We
consider a loan received because of employment if it is 5% × $150,000 × 1/4 = $1,875 ........................... $6,000
reasonable to conclude that the loan would not have been plus
received, or the terms of the loan would have been
different, had there been no current, previous, or intended b) Amount paid by a third party.......................... $1,000
employment or intended employment. $7,000
minus
The loan can be received by the employee or any other
person or partnership, including, for example, the c) Interest paid ($2,000 + $1,000) = ......... $3,000
employee's spouse. A benefit can also arise from any other d) Amount Joshua repaid ......................... $1,000 $4,000
indebtedness such as the unpaid purchase price of goods or
services, or an overpayment of salary that your employee Joshua’s taxable benefit .......................................... $3,000
repays you over a period of time.
The taxable benefit the employee receives in the tax year is Loans received because of shareholdings
the total of the following amounts:
Loans received or debts incurred because of shareholdings
a) the interest on each loan and debt calculated at the may give rise to a taxable benefit when all of the following
prescribed rate for the periods in the year during which conditions are met:
it was outstanding
■ the loan is received, or the debt is incurred, by a person
b) the interest on the loan or debt that was paid or payable or partnership (except when the person is a corporation
for the year by you, the employer (for this purpose, an resident in Canada or the partnership is one in which
employer is a person or partnership that employed or each partner is a corporation resident in Canada)
intended to employ the individual and also includes a
■ the person or partnership is one of the following:
person related to the person or partnership)
– a shareholder of a corporation
minus the total of the following amounts:
c) the interest for the year that any person or partnership – connected with a shareholder of a corporation, or
paid on each loan or debt no later than 30 days after the – a member of a partnership or beneficiary of a trust that
end of the year was a shareholder of a corporation, and
d) any part of the amount in b) that the employee pays ■ because of these shareholdings, the person or partnership
back to the employer no later than 30 days after the end receives a loan from, or incurs a debt to:
of the year
– the corporation,
Note
Sometimes these rules do not apply. For more – a corporation related to that corporation, or
information, see “Exceptions,” on page 24. – a partnership of which the corporation or the related
If the employee receives a taxable benefit on a loan or debt corporation was a member
because of employment, report the benefit in box 14, If these conditions are met, the person or partnership (for
“Employment income,” and in the “Other information” example, a shareholder) is considered to receive a benefit in
area, report the interest benefit under code 36. Report any the tax year that is equal to:
forgiven loan principal amounts under code 40.
■ the interest on the outstanding portion of each loan and
For information about similar taxable benefits resulting debt calculated at the prescribed rate for the period in the
from loans received because of services performed by a year during which it was outstanding
corporation that carries on a personal services business,
see Interpretation Bulletin IT-421R, Benefits to individuals, minus
corporations and shareholders from loans or debt.
■ the interest for the year that any party (such as the
person or partnership) paid on each loan or debt in the
Example year or no later than 30 days after the end of the year
Joshua is your employee. He borrowed $150,000 from you
Note
at the beginning of the year. The prescribed rate of interest
A person may be an individual, a corporation, or a trust.
for the loan is 3% for the first quarter, 4% for the second
and third quarters, and 5% for the fourth quarter. Joshua The calculation of the benefit is modified where one or
paid you $2,000 interest on the loan no later than 30 days more such loans are considered to have been made

canada.ca/taxes 25
 under a back-to-back shareholder loan arrangement. For The amount of interest you calculate as a benefit should not
more information on back-to-back shareholder loans, see be more than the interest that would have been charged at
pages 54 and 55 of Tax Measures: Supplementary the prescribed rate in effect when the employee received
Information for Budget 2016 on the Department of the loan.
Finance Canada pages of Canada.ca.
If the term of repayment for the home-relocation loan is
Include the shareholder’s benefit under code 117, “Other more than five years, the balance owing at the end of five
income,” in the “Other information” area at the bottom of years (from the day the loan was made) is considered a new
the T4A slip. loan. Treat the outstanding balance as a new loan on that
date. To calculate the benefit, use the prescribed rate in
Home-purchase loan effect at that time.
A home-purchase loan is any part of a loan to an employee Note
that the employee used to get or repay another loan to buy For 2018 and later tax years, the home-relocation loan
a residence. The residence has to be for that employee or a deduction has been eliminated. This change was
person related to that employee. This also applies to a announced in the 2017 federal budget which received
shareholder or a person related to a shareholder. royal assent on June 22, 2017 (Bill C-44).
To calculate the benefit for a home-purchase loan, see
“Loans received because of employment,” on page 25. Forgiven loans
A loan to an employee may be partly or fully forgiven (the
Once a home-purchase loan is established, the prescribed
employee does not have to repay the loan). In either case,
interest rate remains in effect for a period of five years. The
the forgiven amount is considered employment income and
amount of interest you calculate as a benefit should not be
is added to the employee’s T4 slip for the year the amount
more than the interest that would have been charged at the
is forgiven. For more information, see Interpretation
prescribed rate when the loan or the debt was established.
Bulletin IT-421R, Benefits to individuals, corporations and
If the term of repayment for a home-purchase loan is more shareholders from loans or debt.
than five years, the balance owing at the end of five years
(from the day the loan was made) is considered a new loan. Reporting the benefit
Treat the outstanding balance as a new loan on that date.
If an employee receives a loan or incurs a debt because of
To calculate the benefit, use the prescribed rate in effect at
employment, report the benefit in box 14, “Employment
that time.
income,” and in the “Other information” area under
code 36 at the bottom of the employee’s T4 slip.
Home-relocation loans
If a person or partnership that was a shareholder (or was
A home-relocation loan is a loan you give to an employee
related to a shareholder) receives a loan or incurs a debt,
or an employee’s spouse or common-law partner when
you generally have to report the benefit on a T4A slip. Enter
they meet all of the following conditions:
the amount under code 117, “Loan benefits,” in the “Other
■ The employee or the employee’s spouse or common-law information” area at the bottom of the T4A slip.
partner moves to start work at a new location in Canada
Note
■ The employee or the employee’s spouse or common-law The taxable benefit must be reported on a T4 or T4A slip
partner uses the loan to buy a new residence that is at even if the borrower is eligible to deduct the interest.
least 40 kilometres closer to the new work location than
the previous home Prescribed interest rates
■ The employee or the employee’s spouse or common-law To get the current prescribed rates of interest, go
partner receives the loan because of the employee’s to canada.ca/taxes-interest-rates.
employment
■ The employee designates the loan as a home-relocation Loyalty and other points programs
loan Your employees may collect loyalty points, such as
■ The loan is used to acquire a residence or a share of the frequent flyer points or air miles, on their personal credit
capital stock of a co-operative housing corporation cards when travelling on business trips, even though you
acquired only to obtain the right to inhabit a residence reimburse them for the amounts they spend. Usually, these
owned by the corporation. The residence must be for the points can be exchanged or cashed in for rewards (goods or
habitation of the employee and be their new residence services, including gift cards and certificates).

Note Your employees do not have to include in their income the

Only a debt that is a loan can be a home relocation loan. value of the rewards they received or enjoyed from the
points they collect on these business trips, unless any of the
To calculate the benefit for the home-relocation loan, see following apply:
“Loans received because of employment,” on page 25.
■ the points are converted to cash
Include the amount of the taxable benefit in box 14,
“Employment income,” and in the “Other information” ■ the plan or arrangement between you and the employee
area under code 36 at the bottom of the employee’s T4 slip. seems to be a form of remuneration

26 canada.ca/taxes
■ the plan or arrangement is a form of tax avoidance Generally, there is no GST/HST and PST to include in the
value of this benefit. However, some medical expenses that
If any of the conditions above are met, the employee has to
qualify for the medical expense tax credit may be subject to
declare the fair market value (FMV) of any personal
the GST/HST and PST. In such a case, include the
rewards they received on an income tax and benefit return.
GST/HST and PST in the value of the benefit.
Note
For more information on qualifying medical expenses, see:
If you control the points (such as when an employee
uses a company credit card) you have to report on their ■ Income Tax Folio S1-F1-C1, Medical Expense Tax Credit
T4 slip the FMV of any personal rewards they received
■ Income Tax Folio S2-F1-C1, Health and Welfare Trusts
from redeeming the points.
■ Guide RC4064, Disability-Related Information
For examples of situations where loyalty and other points
programs are considered taxable benefits, go to canada.ca
/taxes-gifts, select “Gifts and awards outside our policy,” Moving expenses and relocation
and then select “Loyalty and other points programs.” benefits
When you transfer an employee from one of your places of
Meals business to another, the amount you pay or reimburse the
Overtime meals or allowances employee for certain moving expenses is usually not a
taxable benefit. This includes any amounts you incurred to
If you provide overtime meals, or an allowance for
move the employee, the employee’s family, and their
overtime meals, there is no taxable benefit if all of the
household effects. This also applies when the employee
following conditions apply:
accepts employment at a different location from the
■ The allowance, or the cost of the meal, is reasonable. We location of their former residence. The move does not have
generally consider a value of up to $23 (including the to be within Canada.
GST/HST and PST) to be reasonable. We will consider
Also, if you pay certain expenses to move an employee,
higher amounts reasonable if the relative cost of meals in
their family, and their household effects out of a remote
that location is higher, or under other significant
work location when their employment duties are finished,
extenuating circumstances
the amount you pay is not a taxable benefit.
■ The employee works two or more hours of overtime
If you paid allowances to your employee for incidental
right before or right after their scheduled hours of work
moving expenses that they do not have to account for, see
■ The overtime is not frequent and is occasional in nature “Non-accountable moving allowances,” on page 28.
(usually less than three times a week)
If overtime occurs frequently or becomes the norm, we Moving expenses paid by employer that are
consider the overtime meals or allowances to be a taxable not a taxable benefit
benefit, since they start to take on the characteristics of The following expenses are not a taxable benefit to your
additional remuneration. employees if you paid or reimbursed them:
For examples of situations where overtime meals, or ■ the cost of house hunting trips to the new location,
allowances for overtime meals, are considered taxable including child care and pet care expenses while the
benefits, go to canada.ca/examples-overtime-meals employee is away
-allowances.
■ travelling costs (including a reasonable amount spent for
meals and lodging) while the employee and members of
Subsidized meals the employee’s household were moving from the old
If you provide subsidized meals to an employee (such as in residence to the new residence
an employee dining room or cafeteria), these meals are not
considered a taxable benefit if the employee pays a ■ the cost to the employee of transporting or storing
reasonable charge. A reasonable charge is one that covers household effects while moving from the old residence to
the cost of the food, its preparation, and service. the new residence

If the charge is not reasonable, the value of the benefit is the ■ costs to move personal items such as automobiles, boats,
cost of the meals, minus any payment the employee makes. or trailers

Include the taxable benefit in box 14, “Employment ■ charges and fees to disconnect telephones, television or
income,” and in the “Other information” area under aerials, water, space heaters, air conditioners, gas
code 40 at the bottom of the employee’s T4 slip. barbecues, automatic garage doors, and water heaters
■ fees to cancel leases
Medical expenses ■ the cost to the employee of selling the old residence
If you pay or provide an amount to pay for an employee’s (including advertising, notarial or legal fees, real estate
medical expenses in a tax year, these amounts are commission, and mortgage discharge penalties)
considered to be a taxable benefit for the employee.
■ charges to connect and install utilities, appliances, and
fixtures that existed at the old residence

canada.ca/taxes 27
■ adjustments and alterations to existing furniture and the sale of his house. Paul started to work at his new work
fixtures to arrange them in the new residence, including location on December 1, 2020.
plumbing and electrical changes in the new residence
Paul’s eligible housing loss amounted to $65,000. You paid
■ automobile licences, inspections, and drivers’ permit out the compensation in two payments: $30,000 in
fees, if the employee owned these items at the former September 2020 and $35,000 in February 2021.
location
Paul’s taxable benefit in 2020 was $7,500 (half of the
■ legal fees and land transfer tax to buy the new residence amount paid in 2020 that is more than $15,000).
■ the cost to revise legal documents to reflect the new Paul’s taxable benefit in 2021 is $17,500. This is calculated
address as follows:
■ reasonable temporary living expenses while waiting to ■ half of the total of amounts paid in 2020 and 2021 that is
occupy the new, permanent accommodation more than $15,000 (1/2 × [$65,000 – $15,000] = $25,000)
■ long-distance telephone charges that relate to selling the minus
old residence
■ the amount included in income in 2020 ($7,500)
■ amounts you paid or reimbursed for property taxes, heat,
hydro, insurance, and grounds maintenance costs
to keep up the old residence after the move, when all For more information on housing losses, see Income Tax
reasonable efforts to sell it have not been successful Folio S2-F3-C2, Benefits and Allowances Received from
Employment.
Moving expenses paid by employer that are a
taxable benefit Non-accountable moving allowances
If you pay or reimburse moving costs that we do not list A non-accountable moving allowance is an allowance for
above, the amounts are generally considered a taxable which an employee does not have to provide details or
benefit to the employee. submit receipts to justify amounts paid. We consider a
non-accountable moving allowance for incidental relocation
If you do not reimburse, or only partly reimburse, an or moving expenses of $650 or less to be a reimbursement
employee for moving expenses, the employee may be able of expenses that the employee incurred because of an
to claim some of the moving expenses when filing their employment-related move. Therefore, this type of
income tax and benefit return. allowance is not taxable. For us to consider it as a
For more information on the deduction for moving reimbursement for incidental expenses, the employee
expenses that is available to your employees, see Income has to certify in writing that they incurred expenses for at
Tax Folio S1-F3-C4, Moving Expenses, and Form T1-M, least the amount of the allowance, up to a maximum of
Moving Expenses Deduction. $650.
Do not report the amount of the reimbursement. Report
Housing loss any part of the non-accountable moving allowance that is
If you pay or reimburse your employee for a housing loss, more than $650 in box 14, “Employment income,” and in
the amount is a taxable benefit for the employee. the “Other information” area under code 40 at the bottom
of the employee’s T4 slip.
However, there is an exception for amounts paid for an
eligible housing loss. Generally, in these situations, only
half of the amount that is more than $15,000 is taxable. Examples
If you gave a non-accountable moving allowance of $625 to
Note
an employee who certifies that they incurred expenses for
If you spread the payment over two years, you will need
the amount of the allowance, the employee will not be
to include an amount on your employee’s T4 slip for
taxed on the amount received. Do not include this amount
each year. Example 2 below shows how to calculate the
on the employee’s T4 slip.
taxable benefit.
If you gave a non-accountable moving allowance of $750 to
Example 1 an employee who can certify the expenses, they will be
In March 2021, you compensated Clara, your employee, for taxed on $100 only, which is the part of the amount that is
a $40,000 loss she incurred on the sale of her house. The loss more than $650. Include the $100 on a T4 slip in box 14,
was an eligible housing loss. Clara started to work at her “Employment income,” and in the “Other information”
new workplace in June 2021. area under code 40 at the bottom of the employee’s T4 slip.

The taxable benefit you will report on Clara’s 2020 T4 slip

will be $12,500, calculated as follows: Municipal officer’s expense allowance
1/2 × ($40,000 – $15,000) A municipal corporation or board may pay a
non-accountable expense allowance to an elected officer to
Example 2 perform the duties of that office.
In June 2020, you agreed to compensate Paul, your
employee, for any eligible housing loss that he incurred on

28 canada.ca/taxes
For 2019 and later tax years, the full amount of this On the other hand, if you contribute to a plan that is
non-accountable allowance is a taxable benefit. Enter it in registered under the Pooled Registered Pension Plan Act or
box 14, “Employment income,” and in the “Other a similar provincial act and not with the Minister of
information” area under code 40 at the bottom of the National Revenue, your contributions are a taxable benefit.
employee’s T4 slip. They are considered to be paid in cash and are taxable,
pensionable, and insurable. Deduct income tax, CPP
Parking contributions, and EI premiums.

Employer-provided parking is usually a taxable benefit for For more information about PRPPs, go to canada.ca/taxes
an employee, whether or not the employer owns the lot. -pooled-registered-pension-plan.
The amount of the benefit is based on the fair market value
of the parking, minus any payment the employee makes to Power saws and tree trimmers
use the space.
If you are an employer in the forestry business, you may
There are some exceptions to the taxability of parking: have employees who, according to their contracts, have to
use their own power saws or tree trimmers at their own
■ If your employee has a disability, the parking benefit is
expense.
generally not taxable. For more information, see
“Disability-related employment benefits,” on page 19 Rental payments you make to employees for the use of
their own power saws or tree trimmers are taxable benefits,
■ There is no taxable benefit for your employee when both
and should be included in their income on a T4 slip. Their
of the following conditions are met:
income should not be reduced by the cost or value of saws,
– you provide parking to your employee for business trimmers, parts, gasoline, or any other materials the
purposes employee supplies.
– your employee regularly has to use their own
automobile or one you usually supply to do their Premiums under provincial
duties hospitalization, medical care
Note insurance, and certain
Travel between work and home is not considered travel Government of Canada plans
for business purposes.
You may be paying premiums or contributing to a
We do not require you to include a benefit in your provincial or territorial hospital or medical care insurance
employee’s income in the following situations: plan for an employee. The amount you pay is considered a
■ A business operates from a shopping centre or industrial taxable benefit for the employee. Report this benefit in
park where parking is available to both employees and box 14, “Employment income,” and in the “Other
other people information,” area under code 40 at the bottom of the
employee’s T4 slip. If you have to make payments to such a
■ You provide scramble parking (there are significantly plan for amounts other than premiums or contributions for
fewer spaces available than there are employees who the employee, they are not considered a taxable benefit for
want parking). For more information on scramble the employee.
parking, go to canada.ca/cra-parking
If you are the former employer of an employee who has
Note retired, any amount you pay as a contribution to a
If you provide enough parking spaces for all employees provincial or territorial health services insurance plan for
who want parking, but do not assign the parking spaces the retired employee is a taxable benefit.
to individual employees, this is not scramble parking.
You must add the benefit to the employee’s Report this benefit under code 118, “Medical premium
remuneration. benefits,” in the “Other information” area at the bottom of
the T4A slip.
To determine if an employee has received a benefit, the
facts of each case must be examined. If you are not sure if Any amount that the federal government pays for
employer-provided parking is a taxable benefit, contact us. premiums under a hospital or medical care insurance plan
for its employees and their dependants serving outside
You can answer a series of questions on our Web site to Canada is a taxable benefit. This also applies to dependants
help you determine if there is a taxable benefit. For more of members of the Royal Canadian Mounted Police and the
information, go to canada.ca/cra-parking. Canadian Forces serving outside Canada.

Pooled registered pension plans Private health services plan premiums

(PRPP) If you make contributions to a private health services plan
Contributions you make to a PRPP for your employees are (such as medical or dental plans) for employees, there is no
not a taxable benefit if the plan has been accepted for taxable benefit for the employees.
registration by the Minister of National Revenue and that Note
registration has not been revoked. Do not include these Employee-paid premiums to a private health services
contributions in your employees’ employment income. plan are considered qualifying medical expenses and can

canada.ca/taxes 29
 be claimed by the employee on their income tax and some kind of contract with the company providing the
benefit return. facility
Include the amounts that the employee paid on a T4 slip in ■ You pay, reimburse, or subsidize the employee for
the “Other information” area under code 85. The use of expenses incurred for food and beverages at a restaurant,
code 85 is optional. If you do not enter code 85, we may ask dining room lounge, banquet hall, or conference room of
the employee to provide supporting documents. a recreational facility or club
Use the T4A slip to report these amounts for former ■ You provide recreational facilities to a select group or
employees or retired employees. Enter the amount under category of employees for free or for a minimal fee, while
code 135, “Recipient-paid premiums for private health other employees have to pay the full fee. There is a
services plans,” in the “Other information” area at the taxable benefit for employees who do not have to pay the
bottom of the T4A slip. full fee
For more information on private health services plans, go However, the use of a recreational facility or club does not
to canada.ca/private-health-services-plan and see result in a taxable benefit for an employee in any of the
Interpretation Bulletin IT-339R, Meaning of ‘private health following situations:
services plan’ (1988 and subsequent taxation years).
■ You provide an in-house recreational facility and the
facility is available to all your employees. This applies
Professional membership dues whether you provide the facilities free of charge or for a
If you pay professional membership dues for your minimal fee
employee and you are the primary beneficiary of the ■ You make an arrangement with a facility to pay a fee for
payment, there is no benefit for the employee. the use of the facility, the membership is with you and
Whether you or the employee is the primary beneficiary is not your employee and the facility or membership is
a question of fact. If you pay or reimburse professional available to all your employees. Membership will be
membership dues because membership in the organization considered to be made available to all employees as long
or association is a condition of employment, we consider as each employee can use the membership even if an
you to be the primary beneficiary and there is no taxable employee chooses not to
benefit for the employee. ■ You provide your employee with a membership in a
When membership is not a condition of employment, you, social or athletic club and it can be clearly demonstrated
as the employer, are responsible for determining the that you are the primary beneficiary of the membership.
primary beneficiary. You have to be prepared to justify The membership is a taxable benefit to your employee if
your position if we ask you to do so. the membership in or use of the club’s facilities provides
only an indirect benefit to you. This would be the case
In all situations where you pay or reimburse an employee’s where the employee becomes physically healthier as a
professional membership dues and the primary beneficiary result of using the club’s facilities and becomes generally
is the employee, there is a taxable benefit for the employee. better able to perform their duties (for example, fewer
Note sick days, less downtime, remain fit for duty)
You should tell your employee that they cannot deduct For more information, see Income Tax Folio S2-F3-C2,
from their employment income any non-taxable Benefits and Allowances Received from Employment.
professional dues that you have paid or reimbursed to
them.
Registered retirement savings plans
For more information, see Interpretation Bulletin IT-158, (RRSPs)
Employees’ professional membership dues.
Contributions you make to your employee’s RRSP and
RRSP administration fees that you pay for your employee
Recreational facilities and club dues are considered to be a taxable benefit for the employee.
The use of a recreational facility or club is a taxable benefit However, this does not include an amount you withheld
for an employee in any of the following situations: from the employee’s remuneration and contributed for the
employee.
■ You pay, reimburse, or subsidize the cost of a
membership at a recreational facility, such as an exercise If the GST/HST applies to the administration fees, include
room, swimming pool, or gymnasium it in the value of the benefit.
■ You pay, reimburse, or subsidize the cost of
memberships to a business or professional club (that Payroll deductions
operates fitness, recreational, sports, or dining facilities Contributions you make to your employee’s RRSPs are
for the use of their members but their main purpose is generally paid in cash and are pensionable and insurable.
something other than recreation) Deduct CPP contributions and EI premiums.
■ You pay, reimburse, or subsidize the cost of membership However, your contributions are considered non-cash
dues in a recreational facility of the employee’s choice, benefits and are not insurable if your employees cannot
up to a set maximum. In this case it is the employee who withdraw the amounts from a group RRSP (except for
has paid for the membership, owns it, and has signed withdrawals under the Home Buyers’ Plan or Lifelong

30 canada.ca/taxes
Learning Plan) before the employees retire or cease to be “Security options deduction for the disposition of shares of
employed. a Canadian controlled private corporation – Paragraph
110(1)(d.1).”
Although the benefit is taxable and has to be reported on
the T4 slip, you do not have to deduct income tax at source The taxable benefit is the difference between the fair market
on the contributions you make to your employee’s RRSPs if value (FMV) of the shares or units when the employee
you have reasonable grounds to believe that the employee acquired them and the amount paid, or to be paid, for
can deduct the contribution for the year. For details, see them, including any amount paid for the rights to acquire
Chapter 5 of Guide T4001, Employers’ Guide – Payroll the shares or units. Also, a benefit can accrue to the
Deductions and Remittances. employee if their rights under the agreement become
vested in another person, or if they transfer or sell the
Administration fees that you pay directly for an employee
rights.
are considered taxable and pensionable. Deduct CPP
contributions and income tax. These are considered a The shares or trust units are considered to be acquired
non-cash benefit, so they are not insurable. Do not deduct when legal ownership of the shares or units has been
EI premiums. transferred and the vendor has entitlement to receive
payment. In general, this would occur where the shares or
Security options units have been transferred to the employee/broker and
paid for.
A security is a share of the capital stock of a corporation or
a unit of a mutual fund trust that is a qualifying person. Include this benefit in box 14, “Employment income,” and
in the “Other information” area under code 38 at the
Note bottom of the employee’s T4 slip. Also, show the
A qualifying person is a corporation or a mutual fund deductions the employee is entitled to in the “Other
trust. information” area of the T4 slip, as explained in the rest of
Many employers grant options to their employees as a form this section.
of compensation. These options give the employee of the For more information on security options, see
employer or of a qualifying person with which the Interpretation Bulletin IT-113R, Benefits to Employees –
employer does not deal at arm’s length, the right to acquire Stock Options.
a security of the employer, or a security of another
qualifying person with which the employer does not deal at Cash-outs
arm’s length.
An employer may allow an employee to receive cash
Generally, options issued to employees will be provided instead of securities in exchange for their options.
under one of the following three types of plans: Generally, the cash paid is equal to the difference between
Employee stock purchase plan (ESPP) – This plan allows the FMV of the securities at the time the options would
the employee to acquire shares at a discounted price, have been exercised and the amount paid or to be paid for
(i.e., for an amount that is less than the value of the stock at the securities. This difference is equal to the employment
the time of the acquisition of the shares). Many ESPPs benefit the employee is deemed to have received.
provide for a delay in the acquisition of the shares: an If an employee relinquishes a stock option right to an
employee contributes a certain amount over a period of employer in exchange for a cash payment or other in kind
time and, at pre-specified periods, the employee can benefit, the employee can claim the security options
purchase shares at a discount using the accumulated deduction if eligible or the employer can claim the cash-out
contributions. The benefit is equal to the value of the as an expense, but not both. If the employer chooses not to
shares, minus the amount paid. claim the cash-out as an expense, the employer must make
Stock bonus plan – Under this plan, an employer agrees to an election to do so under subsection 110(1.1) by entering
give the shares to the employee free of charge. In effect, the this amount under code 86, “Security options election,” in
employer agrees to sell or issue shares to the employee for the “Other information” area of the T4 slip. This would
no cost. allow the employee to claim the deduction under
paragraph 110(1)(d). The amount you report under code 86
Stock option plan – This plan allows the employee to may be different from the taxable benefit you have to
purchase shares of the employer’s company or of a include in the employee’s income in box 14 and under
non-arm’s length company at a pre-determined price. code 38.
If code 86 of the T4 is not entered, this means that the
Taxable benefit employer decided to claim the expense and the employee
When a corporation agrees to sell or issue its shares to an would not be allowed to claim the deduction under
employee, or when a mutual fund trust grants options to an paragraph 110(1)(d). For more information, go
employee to acquire trust units, the employee may receive to canada.ca/payroll.
a taxable benefit. Generally, the employee receives the
taxable benefit in the same year they acquire the shares or Note
units, or otherwise disposes of their rights under the option You cannot elect to defer the security option.
agreement. However, when certain conditions are met, the
taxable benefit is deferred until the year the employee
disposes of the shares. For more information, refer to

canada.ca/taxes 31
Payroll Deductions the qualifying person meets both of the following
Cash-outs conditions:
Deduct CPP Contribution, EI premiums and income tax. ■ is not a Canadian-controlled private corporation
■ has, or is part of a consolidated group that has, gross
Options
revenues of more than $500 million
Security options are considered a non-cash benefit, so they
are not insurable. In all cases do not deduct EI premiums. The qualifying person is required to fill out T2 Schedule 59
There is no CPP contribution or no income tax withholding to report non-qualifying security options beyond the
requirement where a taxable benefit is received by an $200,000 annual vesting limit.
arms-length employee with respect to the disposition of
Canadian-controlled private corporation shares. Designation of non-qualified securities
In all other cases where a taxable benefit is received, the Qualifying persons subject to the new rules will be able to
employer is required to withhold and remit an amount in designate securities to be issued or sold under a securities
respect of the taxable security option benefit (excluding any option agreement as non-qualified securities for purposes
security option deduction) to the same extent as if the of the employee stock option rules. When this designation
amount of the benefit had been paid as an employee bonus. is made, employees will not be entitled to a stock option
deduction, but the employer will be entitled to a deduction
For more information, go to canada.ca/taxes-security for the value of the benefit received by employees.
-options or see Chapter 6 of Guide T4001, Employers’
Guide – Payroll Deductions and Remittances. Deduct CPP Notification requirements for non-qualified securities
contributions and income tax. Qualifying persons will be required to notify employees in
When determining the amount of the security option writing no later than 30 days after the day the securities
benefit subject to income tax withholding, we will permit option agreement is entered into for non-qualified
the employer to reduce the benefit by 50% using the securities, and to report the issuance of securities options
Security options deduction under paragraph 110(1)(d). for non-qualified securities in a prescribed form with their
tax return.
Security options deduction –
Charitable donations
Paragraph 110(1)(d) An employee will be ineligible for the additional 50% stock
The employee can claim a deduction under option deduction if the employee donates to a qualified
paragraph 110(1)(d) of the Income Tax Act if all of the donee a publicly listed security acquired under a securities
following conditions are met: option that is a non-qualified security under the new stock
■ a qualifying person agreed to sell or issue to the option rules. The employee may, however, be eligible for
employee shares of its capital stock or the capital stock of the charitable donation tax credit.
another corporation that it does not deal with at arm’s Note
length, or agreed to sell or issue units of a mutual fund The effect of foreign exchange gains and losses is not
trust relevant when determining if an individual is eligible for
■ the employee dealt at arm’s length with these qualifying the security option deduction.
persons right after the agreement was made
Security options deduction for the disposition
■ if the security is a share, it is a prescribed share
(as defined in the Income Tax Regulations) and if it is a
of shares of a Canadian-controlled private
unit, it is a unit of a mutual fund trust corporation – Paragraph 110(1)(d.1)
The employee receives the benefit in the year they dispose
■ the price of the share or unit is not less than its fair
of the shares, but not in the year of acquiring them if all of
market value when the agreement was made
the following conditions are met:
■ there are additional conditions where an employee
■ when the agreement to sell or issue shares to the
receives cash instead of acquiring securities (see
employee was concluded, the issuing or selling
"Cash-outs" section), and where the security options are
corporation was a Canadian controlled private
granted on or after July 1, 2021 (see "Annual vesting
corporation (CCPC)
limit" section)
■ the employee acquired shares after May 22, 1985
The deduction the employee can claim is one-half of the
amount of the resulting taxable benefit in the year. Identify ■ the employee dealt at arm’s length with the corporation
the amount of the deduction by entering it in the “Other or any other corporation involved right after the
information” area under code 39 at the bottom of the agreement was concluded
employee’s T4 slip.
In this case, the employee can claim a deduction under
paragraph 110(1)(d.1) of the Income Tax Act if all of the
Annual Vesting Limit
following conditions are met:
For security options granted on or after July 1, 2021 (other
than options granted after June 2021 that replace options ■ CCPC shares disposed of in the year where the employee
granted before July 2021), the employee is subject to a dealt at arm’s length with the corporation
$200,000 annual vesting limit under paragraph 110(1)(d) if

32 canada.ca/taxes
■ the employee has not disposed of the share (otherwise If the GST/HST applies to the administration fees, include
than as a result of the employee’s death) or exchanged it in the value of the benefit.
the share within two years after the date the employee
acquired it Tickets
■ the employee did not deduct an amount under Whether a ticket is a taxable benefit to the employee
paragraph 110(1)(d) for the benefit depends on whether the ticket is provided for personal or
The deduction the employee can claim is one-half of the business use. Each case is different.
amount of the resulting taxable benefit in the year. Identify Generally, the value of tickets is considered a taxable
the amount of the deduction by entering it in the “Other benefit when an employer gives an employee tickets for
information” area under code 41 at the bottom of the personal use unless it is being given under the terms of the
employee’s T4 slip. gifts and awards policy. This would also be the case if the
employer gives tickets to a person with whom the
Social events employee does not deal at arm’s length (such as a family
member) for a non-business use.
If you provide a free party or other social event to all your
employees and the cost is $150 per person or less, we do not There is no taxable benefit to an employee for the value of
consider it to be a taxable benefit. Additional costs such as a ticket used for business purposes. Sometimes an
transportation home, taxi fare, and overnight accommodation employee needs a ticket to attend a game or event to be able
are not included in the $150 per person amount. If the cost of to perform their employment duties. In these situations, the
the party is greater than $150 per person, the entire amount, tickets are given to the employee for a business use.
including the additional costs, is a taxable benefit.
Employment duties may include:
If the benefit is all cash, do not include the GST/HST and
■ promoting and marketing to suppliers or other business
PST. However, if all or part of the taxable benefit is
contacts
non-cash and is not an exempt or zero-rated supply,
include the GST/HST and PST in the value of that part of ■ supervising and managing at an event
the benefit.
■ performing other specific duties required during the
For more information, see Income Tax Folio S2-F3-C2, event, including:
Benefits and Allowances Received from Employment.
– providing on-call, on-site emergency medical services

Spouse’s or common-law partner’s – conducting in-venue marketing promotions

travelling expenses – training on a product
If a spouse or common-law partner accompanies an An employer has to keep records to support the business
employee on a business trip, the amount you reimburse the use of tickets given to employees. These records should
employee for the spouse’s or common-law partner’s contain all of the following information:
travelling expenses is a taxable benefit for the employee.
■ identification of the employee receiving the tickets
The reimbursement is not considered a taxable benefit if the
spouse or common-law partner went at your request and ■ details of the personal or business use
was mostly engaged in business activities during the trip. ■ number of tickets
For more information, see Interpretation Bulletin ■ value of the tickets
IT-131R, Convention expenses.
Reporting the benefit
Tax-free savings account (TFSA) Employers have to include in the employee’s income the
You may offer your employees and their spouses the value of all tickets, which are used for personal purposes,
opportunity to participate in a group TFSA. Contributions given to an employee during the year. Include the fair
you make to your employees’ TFSA for them, as well as market value (usually the face value of the ticket, including
TFSA administration fees that you pay for them, are applicable taxes) of the tickets in box 14, “Employment
considered to be a taxable benefit for the employees. income,” and in the “Other information” area under
However, this does not include any amount you withheld code 40 at the bottom of the employee’s T4 slip.
from the employees’ remuneration and contributed for the
employees. Tool reimbursement or allowance
Contributions you make to your employees’ TFSA for them If you reimburse or provide an allowance to your
are generally paid in cash and are taxable, pensionable, and employees to offset the cost of tools that they need for their
insurable. Deduct income tax, CPP contributions and EI job or you pay for their tools, the amount of the payment is
premiums. a taxable benefit and should be included in the employees’
Administration fees that you pay directly for an employee income.
are taxable and pensionable. Deduct CPP and income tax. When employed tradespersons (including apprentice
These are considered a non-cash benefit, so they are not mechanics) file their income tax and benefit return, they
insurable. Do not deduct EI premiums.

canada.ca/taxes 33
may be able to deduct part of the cost of eligible tools they Note
bought to earn employment income as a tradesperson. If you provide free or discounted passes to a current
employee in an area other than the transportation
Employers have to fill out and sign Form T2200,
business or its operations, their FMV is a taxable benefit
Declaration of Conditions of Employment, to certify that
for the employee. For example, if a city owns a transit
the employee must acquire these tools as a condition of,
company, the FMV of a pass given to a current employee
and for use in their employment.
in the city’s accounting department would be a taxable
For more information, see Guide T4044, Employment benefit, while a pass given to a current employee in the
Expenses. accounting department of the transit business operations
would not be a taxable benefit.
Transportation passes For examples of situations where transit passes are
considered taxable benefits, go to canada.ca/examples
Airline passes for employees and retirees of -employees-transit-companies.
an airline company
If you provide standby airline passes to a current airline Travel allowance
employee for their personal travel, there is no taxable
benefit for the employee. Part-time employee
If you provide space-confirmed airline passes to a current You may give a part-time employee a reasonable allowance
airline employee for personal travel, the passes are a or reimbursement for travelling expenses incurred by the
taxable benefit. The value of the benefit to be included in employee going to and from a part-time job. If so, and you
the employee’s income is the fair market value of the pass and the part-time employee are dealing at arm’s length,
(including any fees and taxes), less any amount paid by the you do not have to include that amount in the employee’s
employee. income. This applies to:

If you provide standby or space-confirmed airline passes to ■ teachers and professors who work part-time in a
a retired airline employee for their personal travel, there is designated educational institution in Canada, providing
no taxable benefit for the retired employee. service to you as a professor or teacher, and the location
is not less than 80 kilometres from the employee’s home
Transit passes ■ part-time employees who had other employment or
If you pay for or provide your employee with public transit carried on a business, and they did the duties at a
passes, it is usually a taxable benefit for the employee. location no less than 80 kilometres from both the place of
Public transit includes transit by local bus, streetcar, the employee’s home and the place of the other
subway, commuter train or bus, and local ferry. employment or business

Report the taxable benefit on the employee’s T4 slip in Salesperson and clergy
box 14, “Employment income,” and in the “Other
information” area under code 40 at the bottom of the slip. You may pay a reasonable travel allowance for expenses
other than for the use of an automobile (such as meals,
lodging, per diem allowance) to a salesperson or member of
Transit passes – employees of a transit the clergy. You do not have to include the allowance in the
company employee’s income if it was for expenses related to the
If your company is in the business of operating a bus, performance of duties of the office or employment and the
streetcar, subway, commuter train or bus, or ferry service, employee is either of the following:
and you provide free transit passes to your employees or
■ an agent selling property or negotiating contracts for the
their families, special rules apply.
employer
If you provide free or discounted passes to a current or a
■ a member of the clergy
retired employee of one of the businesses mentioned above,
and the passes are only for the employee’s or the retiree’s
use, there is no taxable benefit for the employee or the Other employees
retiree. You have to include reasonable travel allowances in the
income of employees, other than a salesperson or member
Note
of the clergy, who travel to perform the duties of the office
To qualify as a non-taxable benefit under this special
or employment, unless the allowances are received by the
rule, ferry passes are limited to passenger (walk on) fares
employee for travelling away from the municipality and
only.
the metropolitan area where the employer’s establishment
If you provide free or discounted passes to a member of is located and where the employee ordinarily works or
your employee’s or retired employee’s family, the fair reports.
market value (FMV) of the pass is a taxable benefit for the
In some situations, you may provide an allowance to your
employee. Report the retiree’s benefit using code 028,
employee for travel (other than an allowance for the use of
“Other income” in the “Other information” area at the
a motor vehicle) within a municipality or metropolitan area
bottom of the T4A slip.
so your employee can perform their duties in a more
efficient way during a work shift.

34 canada.ca/taxes
This allowance is not a taxable benefit and can be excluded If you pay an allowance to your employee for the cost of
from the employee’s income if all of the following protective clothing and did not require receipts to support
conditions are met: the purchases, the allowance is not a taxable benefit if all of
the following conditions apply:
■ The employee travels away from the office
■ by law, the employee has to wear the protective clothing
■ The allowance is reasonable. We generally consider a
on the work site
value of up to $23 for the meal portion of the travel
allowance to be reasonable ■ the employee used the allowance to buy protective
clothing
■ You are the primary beneficiary of the allowance
■ the amount of the allowance is reasonable
■ The allowance is not an additional form of remuneration
You may pay a laundry or dry cleaner to clean uniforms
This means that you do not have to include this type of
and protective clothing for your employee or you may pay
travel allowance if its main reason is so that your
a reasonable allowance to your employee (when they do
employee’s duties are performed in a more efficient way
not have to provide a receipt). You may also reimburse the
during a work shift.
employee for these expenses when they present a receipt. If
For examples of situations where a travel allowance is you do either of these, the amounts you pay are not taxable
considered a taxable benefit, go to canada.ca/examples benefits for the employee.
-travel-allowance.

Reasonable travel allowances

Chapter 4 – Housing and travel
Whether an allowance for travel expenses is reasonable is a assistance benefits paid in a
question of fact. You should compare the reasonable costs
for travel expenses that you would expect your employee to
prescribed zone
incur against the allowance you pay to the employee for the This chapter applies to you if you meet both of the
trip. following conditions:
If the travel allowance is reasonable, you do not have to ■ you are an employer or a third-party payer who provides
include it in your employee’s income. If it is not reasonable, employment benefits for board, lodging, transportation,
the allowance has to be included in your employee’s or travel assistance
income.
■ you provide these benefits to an employee who works or
For more information, see paragraph 48 in Interpretation lives in locations that are in prescribed zones for
Bulletin IT-522R, Vehicle, Travel and Sales Expenses of purposes of the northern resident’s deductions
Employees.
If your employee works at a special site or a remote work
Your employee may be able to claim certain employment location that is not in a prescribed zone, this chapter does
expenses on their income tax and benefit return. For more not apply to you. For more information, see “Board,
information, see “Employee’s allowable employment lodging, and transportation – Special work sites and remote
expenses,” on page 8. work locations,” on page 17.
For a list of places in prescribed northern zones and prescribed
Uniforms and protective clothing intermediate zones, go to canada.ca/taxes-northern-residents.
Your employee does not receive a taxable benefit if either of
the following conditions apply:
Accommodation or utilities provided
■ you supply your employee with a distinctive uniform by the employer
they have to wear while carrying out the employment
duties If you provide accommodation or utilities free of charge, it
is a taxable benefit to your employee. The method you use
■ you provide your employee with protective clothing to determine the value of the benefit depends on whether
(including safety footwear and safety glasses) designed or not the place in a prescribed zone has a developed rental
to protect him or her from hazards associated with the market.
employment
If you reimburse or pay an accountable advance to your Places with developed rental markets
employee to buy uniforms or protective clothing and Some cities and towns in prescribed zones have developed
require receipts to support the purchases, the rental markets. When that is the case, you base the value of
reimbursement or accountable advance is not a taxable the benefit for any rent or utility you provide on its fair
benefit if: market value.
■ the cost of the uniforms or protective clothing is The cities and towns in prescribed zones that have
reasonable developed rental markets are:
■ by law, the employee has to wear the protective clothing Dawson Creek Fort McMurray Fort St. John
on the work site Grande Prairie Labrador City Thompson
Wabush Whitehorse Yellowknife

canada.ca/taxes 35
Places without developed rental markets Note
In places in prescribed zones without developed rental If more than one employee occupies the same
markets, you have to use other methods to set a value on accommodation, divide the total housing benefit by the
the housing benefit. The method you use depends on number of occupants.
whether you own the residence or rent it from a third party.
If you provide both rent and utilities and can calculate their
Board, lodging, and transportation at
cost as separate items, you have to determine their value a special work site in a prescribed
separately. Add both items to get the value of the housing zone
benefit.
If an employee received a benefit or an allowance for
If your employee reimburses you for all or part of their rent working at a special work site that is excluded from
or utilities, determine the benefit as explained below. income, this amount may affect their claim for a northern
Subtract any amount reimbursed by your employee and residency deduction.
include the amount that remains in their income.
If the employee worked at a special work site in a place in a
prescribed zone and kept their principal place of residence
Accommodations you own
in a place outside of a prescribed zone, you will have to
If you own a residence that you provide rent free to your
identify the exempt part of the board and lodging benefit or
employee, report as a benefit whichever of the following
allowance on the employee’s T4 or T4A slip.
amounts is less:
In the “Other information” area of the T4 slip, enter under
■ the fair market value of the rent
code 31, the exempt part that is related to work sites within
■ the ceiling amount 30 kilometres from the nearest urban area with a
population of at least 40,000 persons. Do not include this in
Similarly, the amount you have to report as a benefit for box 14, “Employment income.”
utilities is whichever of the following amounts is less:
If you are a third-party payer and are completing a T4A slip
■ the fair market value of the utilities for the employee of another employer, report the exempt
■ the ceiling amount part using code 124 “Board and lodging at special work
sites,” in the “Other information” area at the bottom of the
Accommodations you rent from a third party T4A slip.
If you rent a residence from a third party and provide it You have to do this even though you did not include the
rent free to your employee, report as a benefit whichever of excluded amount in income. This way, the employee will
the following amounts is less: have all the information required to correctly calculate their
■ the amount you pay the third party residency deduction.

■ the ceiling amount

Example
Similarly, the amount you have to report as a benefit for You paid your employee $4,000 for board and lodging at a
utilities is whichever of the following amounts is less: special work site that is in a prescribed zone. You and the
employee filled out Form TD4, Declaration of Exemption –
■ the amount you pay the third party
Employment at a Special Work Site.
■ the ceiling amount
Since the benefit is not included as income, you did not
enter the amount of the benefit in box 14, “Employment
Allowable ceiling amounts income,” or in the “Other information” area under code 30
There are allowable ceiling amounts for different types of at the bottom of the T4 slip.
accommodation. Use these ceiling amounts to help
Of the $4,000 you paid, $1,200 relates to a special work site
determine the value of the housing benefit you provide in
that was located 27 kilometres from a town with a
places in prescribed zones that do not have developed
population of 43,000 people (the 30-kilometre part).
rental markets.
You have to enter $1,200 in the “Other information” area
The amounts are considered to include any GST/HST that
under code 31 at the bottom of the T4 slip, even though it
applies, so you do not have to calculate this amount. If the
was not entered in the “Other information” area under
amount of the housing benefit you report is based on the
code 30. The employee will then enter $1,200 on their
fair market value, you have to calculate and report any
Form T2222, Northern Residents Deductions.
GST/HST that applies. If the total of the fair market value,
plus the GST/HST, is more than the allowable ceiling
amount, report the allowable ceiling amount as the housing Note
benefit. An amount that is not included as income for allowances
at a remote work location does not affect the employee’s
For a list of the ceiling amounts for rent and utilities and claim for a northern residency deduction.
definitions for different types of accommodation, see
Publication RC4054, Ceiling Amounts for Housing Benefits
Paid in Prescribed Zones.

36 canada.ca/taxes
Travel assistance benefits You have to identify the portion of the travel assistance that
refers to the medical travel benefits you provide to your
If you provide an employee with travel assistance in a
employee.
prescribed zone, the benefit is taxable unless it was for
business travel. The travel assistance could be for such For a T4 slip, enter the entire travel assistance benefit under
things as vacation, bereavement, medical, or compassionate code 32 in the “Other information” area. Enter the medical
reasons. part under code 33.
If employees travel using transportation that you own or For a T4A slip, enter the entire travel assistance benefit
charter, determine the value of the benefit by assigning a under code 028 “Other income,” in the “Other information”
fair market value to the transportation. area at the bottom of the slip. Enter the medical part under
code 116 “Medical travel assistance.”
When employees travel by some means other than air, the
cost of travel may include automobile expenses, meals, Notes
hotel and motel accommodations, camping fees, taxi fares, If you do not identify which part of the benefit was for
and road and ferry tolls. medical travel, we will consider all travel assistance as
vacation (or other) travel and the employee will not be
When you give employees travel assistance benefits other
entitled to claim a deduction for medical travel. As well,
than cash or refundable tickets (such as travel warrants,
we will limit the deduction for the employee and the
vouchers, or non-refundable tickets), the employees do not
members of the household to two trips each.
receive any benefit until they or members of their
household take the trip. The benefit is income for the Amounts you pay or reimburse your employee for
employees in the year the trip starts, and you should report medical travel or any associated cost under the terms of
it in that year. a private health services plan are not taxable benefits.
Payments you make due to an obligation you have
There are many ways of providing travel assistance
under a collective agreement may be considered a
benefits. You can pay your employee a travel allowance
private health services plan. If this is the case, you
before the trip, such as a certain amount per hour, or on
should not report them on the employee’s T4 slip.
some other periodic basis. You can also make lump-sum
payments to your employee before or after the trip is taken. For more information, see:
You should report such payments in your employee’s
income in the year they receive them, no matter when your ■ canada.ca/private-health-services-plan
employee or members of their household travel. For more ■ Interpretation Bulletin IT-339R, Meaning of ‘private
information, go to canada.ca/housing-travel-prescribed health services plan’ (1988 and subsequent taxation
-zone. years)
You have to report these benefits in box 14, “Employment ■ Income Tax Folio S1-F1-C1, Medical Expense Tax
income,” and in the “Other information” area under Credit
code 32 at the bottom of the employee’s T4 slip.
■ Guide RC4064, Disability-Related Information
If you are a third party who supplies travel benefits to the
employee of another employer, report these benefits under Payroll deductions
code 028 “Other income,” in the “Other information” area When travel assistance benefits are in the form of
at the bottom of the T4A slip. non-refundable tickets or travel vouchers, you have to
An employee who qualifies for the northern residents travel make payroll deductions when the benefit becomes taxable,
deduction will use this amount to calculate their claim. An i.e. when the employee or member of their household takes
employee can claim two trips per year, unless the trips the trip. However, when you give travel assistance in the
were for medical reasons. Therefore, you have to show the form of cash, we consider it to be a cash advance, and you
value of medical travel benefits separately on the slip, as have to make the payroll deductions when the advance is
explained below. paid to the employee.

If the travel assistance is a taxable benefit, include any You may waive the requirement to deduct income tax from
GST/HST that applies in the value of the benefit. Do not the full travel assistance payment you give to your
include the GST/HST in the value of the travel allowances. employee who lives in a prescribed northern zone (or from
50% of the payment received by an employee who lives in a
prescribed intermediate zone). To do this, the employee
Medical travel assistance has to agree, in writing, to use the payment entirely for
Medical travel includes any trip your employee or vacation or medical travel when they receive it. If the
members of their household take to get medical services employee does not agree, you have to deduct income tax.
that are not available in the area where they live. Medical
travel benefits are considered to be the cost of Whether or not you have to make income tax deductions,
transportation from the place in a prescribed zone to the you have to deduct CPP contributions and EI premiums on
place where medical treatment is available. This includes cash payments. You have to deduct CPP contributions on
the transportation cost of an attendant if the patient needs non-cash benefits if the employee also receives cash
one while travelling. remuneration from you during the year. If the non-cash
benefit is the only form of remuneration you provide to
your employee in the year you do not have to make payroll
deductions. For more information about the non-cash

canada.ca/taxes 37
benefits withholding policy, go to Chapter 1 – General
information.
Chapter 5 – Remitting the
GST/HST on employee benefits
Form TD1, Personal Tax Credits Return
Employees who live in a prescribed zone during a This chapter discusses the GST/HST treatment of employee
continuous period of at least six months (that begins or benefits.
ends in the tax year) may be entitled to claim the northern
The Canada Revenue Agency is responsible for
residents deductions when filing their income tax and
administering the GST/HST. In Quebec, Revenu Québec
benefit returns. As a result, these employees can ask for a
administers the GST/HST unless you are a person that is a
reduction in payroll deductions by completing the back of
selected listed financial institution (SLFI) for GST/HST or
Form TD1, Personal Tax Credits Return.
QST purposes or both. If the physical location of your
The residency deduction is equal to whichever is less: business is in Quebec, contact Revenu Québec,
at 1-800-567-4692. Also see the Revenu Québec
■ 20% of their net income for the year
publication IN-203, General Information Concerning the
■ the residency amount they can claim QST and the GST/HST, available at revenuquebec.ca/en.
Note
Employees cannot claim a residency amount for both the Employee benefits
principal place of residence and the special work site for Salaries, wages, commissions, and other cash remuneration
the same period, even if they are both located in (including gratuities) you make to employees are not
prescribed zones. subject to the GST/HST.
For 2021, an employee living in a prescribed northern zone However, the cost of benefits or non-cash compensation
can claim the total of: provided to an employee, commonly referred to as fringe
■ a basic residency amount of $11.00 per day for each day or employee taxable benefits may be subject to the
they live in the prescribed northern zone GST/HST. For the most part, the GST/HST treatment of
these benefits is based on their treatment under the Income
■ an additional residency amount of $11.00 per day for Tax Act.
each day they live in and keeps a residence in that area, if
during that time no one else is claiming a basic residency Generally, if a benefit is taxable for income tax purposes,
amount for living in the same residence for the same we consider you to have made a supply of a property or
period service to the employee.

For 2021, employees living in a prescribed intermediate If the property or service that gives rise to the taxable
zone can claim 50% of the total of the above amounts. benefit is subject to GST/HST, you are considered to have
collected the GST/HST on that benefit. However, there are
Note situations where you will not be considered to have
Employees who receive board and lodging benefits from collected the GST/HST on taxable benefits given to
employment at a special work site in a prescribed zone employees. These situations can be found in the section
have to reduce their residency amount by the value of titled “Situations where you are not considered to
the 30-kilometre part of the benefit they receive if they have collected the GST/HST” on this page.
keep a principal residence that is not in a prescribed
zone. The 30-kilometre part of the excluded benefit will Employee does not pay the GST/HST on
be shown in the “Other information” area under code 31
at the bottom of the employee’s T4 slip. For more
taxable benefits
information, see “Board, lodging, and transportation at a The employee does not pay the GST/HST that you have to
special work site in a prescribed zone,” on page 36. remit on taxable benefits. However, as explained in
previous chapters, an amount for the GST/HST has already
To calculate the amount of tax you should deduct if an been included in the taxable benefits you will report on
employee is claiming a residency deduction on Form TD1: your employee’s T4 slip.
■ reduce the residency amount by 50% if the employee
lives in a prescribed intermediate zone (if the conditions Do you have to remit GST/HST on employee
noted above apply, reduce the residency amount by the taxable benefits?
30-kilometre part of the excluded board and lodging
The following steps will help you determine whether you
benefits from employment at a special work site)
have to remit the GST/HST on employee taxable benefits.
■ divide the employee’s net deduction for the year
Step 1 – Determine whether the benefit is taxable under the
(amount on the back of Form TD1, minus the above
Income Tax Act and the Excise Tax Act (see the previous
adjustments) by the number of pay periods in the year
chapters).
■ subtract the result from their gross earnings for each pay
Step 2 – For each taxable benefit, determine whether any of
period
the situations where you are not considered to have
■ see the tax tables that apply collected the GST/HST applies.

38 canada.ca/taxes
If none of the situations apply, you are considered to have used less than 90% in the commercial activities of the
collected the GST/HST on the taxable benefit and must business
calculate the amount of the GST/HST due. Go to Step 3.
■ you are not an individual, a partnership, or a financial
Step 3 – If you are considered to have collected the institution, and the passenger vehicle or aircraft that you
GST/HST on a taxable benefit, you have to calculate the bought is used 50% or less in the commercial activities of
amount of the GST/HST due. More information on how to the business
calculate the amount of GST/HST due can be found in the
■ you are a financial institution and choose to treat the
sections “Automobile operating expense benefits” and
passenger vehicle or aircraft you lease or have bought as
“Benefits other than automobile operating expense
being used only in non-commercial activities of the
benefits” on page 39.
business (see Note below)
Step 4 – Include the amount of the GST/HST due on your
■ you are not a financial institution and you lease the
GST/HST return and send your remittance, if applicable,
passenger vehicle or aircraft which you use 50% or more
with your GST/HST return for the reporting period that
in non-commercial activities of the business, and you
includes the last day of February 2022.
choose to treat it as being used 90% or more in such
Note non-commercial activities (see Note below)
If the GST/HST is for a reimbursement made by an
Note
employee or an employee’s relative for a taxable benefit
To make this choice, fill out Form GST30, Election for
other than a standby charge or the operating expense of
Passenger Vehicles or Aircraft to be Deemed to be Used
an automobile, the amount may be due in a different
Exclusively in Non-Commercial Activities, or state in
reporting period. For more information, see “Benefits
writing the information required on the form. You do
other than automobile operating expense benefits” on
not have to file this form or statement, but you have to
page 40.
keep it with your records for audit purposes. For more
information about this election, contact us
Situations where you are not at 1-800-959-5525.
considered to have collected the
GST/HST How to calculate the amount of the
You are not considered to have collected the GST/HST on GST/HST you are considered to have
taxable benefits provided to employees in any of the collected
following situations:
The amount of the GST/HST you are considered to have
■ the property or services that give rise to a taxable benefit collected on a taxable benefit is based on a percentage of the
are GST/HST exempt or zero-rated value of the benefit for GST/HST purposes. The percentage
rate you use depends on:
■ a taxable benefit results from an allowance included in
the income of the employee under paragraph 6(1)(b) of ■ the province or territory in which the employee
the Income Tax Act ordinarily reported to work
■ you are restricted from claiming an input tax credit (ITC) ■ if you are a large business on December 31, 2021, for the
in the situations described on page 41, in section “ITC purpose of the recapture of input tax credits for the
restrictions” for the GST/HST paid or payable on the provincial part of the HST
property and services that give rise to the taxable benefit
■ if the benefit is an automobile operating expense benefit
■ the property or services that give rise to a taxable benefit or some other type of benefit
are supplied outside Canada
Value of the benefit
Example The value of the benefit for GST/HST purposes is the total
You, as an employer who is a GST/HST registrant, would of the following two amounts:
like to reward an employee for outstanding performance,
and you have agreed to pay for hotel accommodations and ■ the amount reported on the T4 or T4A slip for the benefit
three meals a day, for one week, in London, England. An ■ if the taxable benefit is for a standby charge or the
amount will be included in the income of the employee as a operating expense of an automobile, the amount, if any,
taxable benefit. However, you will not be considered to that the employee or the employee’s relative reimbursed
have collected tax in respect of the benefit provided to the you for that benefit
employee, since the supplies were made outside of Canada.
Note
When an employee or an employee’s relative has
Also, if the taxable benefit is for the standby charge or reimbursed an amount equal to the entire taxable benefit
operating expense benefit of an automobile or an aircraft, for a standby charge or the operating expense of an
you are not considered to have collected the GST/HST on automobile and, as a result, no benefit is reported on the
this benefit in the following situations: T4 slip, the value of the benefit for GST/HST purposes is
■ you are an individual or a partnership and the equal to the amount of the reimbursement.
passenger vehicle or the aircraft that you have bought is

canada.ca/taxes 39
Automobile operating expense benefits the provincial part of the HST paid or payable in Prince
If the last establishment where your employee ordinarily Edward Island on that motor vehicle
worked or to which they ordinarily reported in the year is ■ 10/110, if the recapture rate was 25% on the last day of
located in a participating province (Prince Edward Island, the last reporting period in which you reported the RITC
New Brunswick, Newfoundland and Labrador, Nova for the provincial part of the HST paid or payable in
Scotia, or Ontario), you are considered to have collected an Ontario on that motor vehicle
amount equal to a percentage of the value of the benefit for
GST/HST purposes, based on one of the following rates: ■ 11.5/111.5, if the recapture rate was 25% on the last day
of the last reporting period in which you reported the
■ 11% for Prince Edward Island, or 10.2% if you are a large RITC for the provincial part of the HST paid or payable
business on December 31, 2021, for the purposes of the in Prince Edward Island on that motor vehicle
recapture of input tax credits for the provincial part of
the HST ■ 12/112, if the recapture rate was 0% on the last day of the
last reporting period in which you reported the RITC for
■ 11% for Nova Scotia, New Brunswick, and the provincial part of the HST paid or payable in Ontario
Newfoundland and Labrador on that motor vehicle
■ 9% for Ontario ■ 14/114, if the recapture rate was 0% on the last day of the
If the last establishment where your employee ordinarily last reporting period in which you reported the RITC for
worked or to which they ordinarily reported in the year is the provincial part of the HST paid or payable in Prince
located in a non-participating province or territory (the Edward Island on that motor vehicle
rest of Canada), you are considered to have collected 3% of If the last establishment where your employee ordinarily
the value of the benefit for GST/HST purposes. worked or to which they ordinarily reported in the year is
located in a non-participating province or territory, you
Benefits other than automobile operating are considered to have collected 4/104 of the value of the
expense benefits benefit for GST/HST purposes as calculated above.
If the last establishment where your employee ordinarily However, when an employee or an employee’s relative has
worked or to which they ordinarily reported in the year is reimbursed an amount for a taxable benefit other than for a
located in a participating province, you are considered to standby charge or the operating expense of an automobile,
have collected, for 2021, the GST/HST as a percentage of this reimbursed amount is consideration for a taxable
the value of the benefit as follows: supply. You are considered to have collected an amount
equal to 5/105 for GST or one of the following for HST on a
■ 14/114 for Nova Scotia, New Brunswick, Prince Edward
reimbursement:
Island, and Newfoundland and Labrador
■ 15/115 for Nova Scotia, New Brunswick, Prince Edward
■ 12/112 for Ontario
Island, and Newfoundland and Labrador
If you are, or were, a large business, and the benefits relate
■ 13/113 for Ontario
to a motor vehicle that was subject to the recapture of input
tax credits (RITC) for the provincial part of the HST paid or In this situation, you have to include the GST/HST for this
payable on that vehicle you are considered to have reimbursement in your GST/HST return for the reporting
collected, for 2021, the GST/HST as a percentage of the period that includes the date of the reimbursement.
value of the benefits as follows:
Additional information on the GST/HST implications on
■ 4/104, if the recapture rate was 100% on the last day of taxable benefits (other than automobile benefits) can be
the last reporting period in which you reported the RITC found in GST Memorandum 9.1, Taxable Benefits (Other
for the provincial part of the HST paid or payable on that than Automobile Benefits).
motor vehicle
■ 6/106, if the recapture rate was 75% on the last day of the When and how to report the GST/HST
last reporting period in which you reported the RITC for you are considered to have collected
the provincial part of the HST paid or payable in Ontario
on that motor vehicle You are considered to have collected the GST/HST, on a
taxable benefit subject to the GST/HST, at the end of
■ 6.5/106.5, if the recapture rate was 75% on the last day of February in the year after the year you provided the benefit
the last reporting period in which you reported the RITC to the employee. This corresponds with the deadline for
for the provincial part of the HST paid or payable in issuing T4 slips.
Prince Edward Island on that motor vehicle
Include the amount of the GST/HST due in your GST/HST
■ 8/108, if the recapture rate was 50% on the last day of the return for the reporting period that includes the last day of
last reporting period in which you reported the RITC for February 2022.
the provincial part of the HST paid or payable in Ontario
on that motor vehicle
Example
■ 9/109, if the recapture rate was 50% on the last day of the You are a GST/HST registrant and have a monthly
last reporting period in which you reported the RITC for reporting period. Although you calculated the taxable
benefits, including any GST/HST and PST, for each

40 canada.ca/taxes
applicable pay period provided to your employees during GST considered to have been
2021, you are considered to have collected the GST/HST on collected on the standby charge
the taxable benefits at the end of February 2022. In your benefit................................................. $4,800 × 4/104 = $184.62
GST/HST return for the reporting period that includes the
Operating expense benefit
last day of February 2022, you have to include the
GST/HST for the taxable benefits given to your employees Taxable benefit reported on T4 ...... $600
in the prior calendar year on line 104 of your GST/HST
return. Employee’s partial reimbursement
of operating expenses ...................... $1,800

Note Total value of the benefit .............. $2,400

If the GST/HST is for a reimbursement made by an GST considered to have been
employee or an employee’s relative for a taxable benefit collected on the operating
other than a standby charge or the operating expense of expense benefit ......................................... $2,400 × 3% = $72.00
an automobile, the amount may be due in a different
reporting period. For more information, see “Benefits Total GST to be remitted on the automobile
other than automobile operating expense benefits” on benefit.............................................................................. $256.62
page 40. You are considered to have collected GST in the amount of
$256.62 at the end of February 2022. You have to include
Automobile benefits – standby charges, this amount on your GST/HST return for the reporting
operating expense benefit, and period that includes the last day of February 2022.
reimbursements
Example 2 – Remitting the GST/HST on automobile
The benefit for an automobile you provide is generally
benefits in a participating province
made up of a standby charge benefit plus an operating
Using the same facts as in Example 1, assume that the last
expense benefit minus any reimbursements employees
establishment to which the employee ordinarily reported in
make in the year for these benefits, as discussed in
the year for the corporation was located in
Chapter 2. When you are calculating the amount of
New Brunswick. The corporation is not a large business for
GST/HST that you are considered to have collected on an
the purpose of recapturing input tax credits for the
automobile benefit you must take all three factors into
provincial part of the HST. In this case, you would calculate
consideration. The standby charge will be calculated at a
the HST remittance as follows:
certain percentage, and the operating expense benefit will
be calculated at another. For more information, go Standby charge benefit ...................... $4,800
to canada.ca/automobile-standby-charge.
HST considered to have been
In addition, the percentages used to calculate the amount of collected on the standby charge
GST/HST will depend on the province or territory in which benefit................................................ $4,800 × 14/114 = $589.47
the automobile is provided as discussed above. Additional Operating expense benefit
information on the GST/HST implications on automobile
benefits can be found in GST Memorandum 9.2, Taxable benefit reported on T4 .......... $600
Automobile benefits. Employee’s partial reimbursement
of operating expenses .......................... $1,800
Example 1 – Remitting the GST/HST on automobile Total value of the benefit .................. $2,400
benefits in a non-participating province
As a corporation registered for the GST/HST, you buy a HST considered to have been
vehicle that is used more than 50% in commercial activities collected on the operating
and is made available to your employee during 2021. The expense benefit ..................................... $2,400 × 11% = $264.00
last establishment where the employee ordinarily reported Total HST to be remitted on the automobile
in the year for the corporation was located in Manitoba. benefit.............................................................................. . $853.47
You calculated a taxable benefit (including GST and PST) of You are considered to have collected HST in the amount of
$4,800 on the standby charge and an operating expense $853.47 at the end of February 2022. You have to include
benefit of $600. Your employee reimbursed you $1,800 for this amount on your GST/HST return for the reporting
the automobile operating expenses within 45 days of the period that includes the last day of February 2022.
end of 2021, so the operating expense benefit to be reported
was reduced by this amount.
You claimed an input tax credit (ITC) for the purchase of
Input tax credits (ITCs)
the automobile and also on the operating expenses. Since As a registrant, you can claim an ITC to recover the
the benefit is taxable under the Income Tax Act, and no GST/HST paid or payable on the purchases and operating
situations described in “Situations where you are not expenses related to your commercial activities.
considered to have collected the GST/HST” on page 38
Generally, commercial activities include the making of
apply, you calculate the GST remittance as follows:
supplies of taxable property and services. For more
Standby charge benefit ................. $4,800 information about what are considered to be commercial

canada.ca/taxes 41
activities, see Guide RC4022, General Information for Property supplied by way of lease, licence, or similar
GST/HST Registrants. arrangement
You cannot claim an ITC for the GST/HST paid or payable
For employee benefits, you can usually claim an ITC for the
on property supplied by way of lease, licence, or similar
GST/HST paid or payable on property and services you
arrangement that is more than 50% for the personal
supply to your employees or their relatives as a benefit if it
consumption, use, or enjoyment of one of the following:
is related to your commercial activities.
■ if you are an individual, yourself or another individual
However, in some situations, you will not be able to claim
related to you
an ITC for the GST/HST paid or payable for property or
services that give rise to taxable benefits you provide your ■ if you are a partnership, an individual who is a partner
employees. For information on these situations, read the or another individual who is an employee, officer, or
rest of this section. shareholder of, or related to, a partner
■ if you are a corporation, an individual who is a
ITC restrictions shareholder or another individual related to the
Remember, if you cannot claim an ITC for the GST/HST shareholder
paid or payable for property or services that give rise to a
taxable benefit due to the restrictions described in one of ■ if you are a trust, an individual who is a beneficiary or
the following paragraphs, you are not considered to have another individual related to the beneficiary
collected the GST/HST and, as a result, you do not have to However, you can claim an ITC if, during the same
remit the GST/HST on that benefit. GST/HST reporting period, you make a taxable supply of
the property to that individual for consideration that
Club memberships becomes due in that period and that is equal to its fair
You may pay or reimburse fees for membership to any club market value.
whose main purpose is to provide dining, recreational, or
For more information on ITCs related to employee benefits,
sporting facilities. In such cases, you cannot claim an ITC
see GST/HST Memorandum 9.1, Taxable Benefits (Other
for the GST/HST paid or payable, regardless of whether
than Automobile Benefits).
the club membership fees or dues are a taxable benefit for
the employee for income tax purposes.
Property acquired before 1991 or from
However, you can claim ITCs for the GST/HST paid or
payable on such memberships if you acquire the a non-registrant
memberships exclusively for supply in the ordinary course If you acquired property before 1991, you did not pay the
of a business of supplying them. GST/HST. Also, you do not generally pay the GST/HST
when you acquire property from a non-registrant. As a
Exclusive personal use result, you cannot claim an ITC under these circumstances.
You cannot claim an ITC for the GST/HST paid or payable However, if you make this property available to your
on property or services you acquire, import, or bring into a employee and the benefit is taxable for income tax
participating province for the exclusive personal purposes, you may still be considered to have collected the
consumption, use, or enjoyment (90% or more) of an GST/HST on this benefit.
employee or an employee’s relative.
However, you can claim an ITC in the following situations: Example
You bought a passenger vehicle from a non-registrant and
■ The consumption, use, or enjoyment of the property or
made it available to your employee throughout 2021. The
service by the employee or their relative does not give
passenger vehicle is used more than 90% in the commercial
rise to a taxable benefit for income tax purposes and no
activities of your business. You report the value of the
amounts were payable by the employee for this benefit.
benefit, including the GST/HST and if applicable, the PST,
The most common type of non-taxable benefit is the
on the employee’s T4 slip. For GST/HST purposes, you will
paying of moving expenses by an employer. Moving
be considered to have collected the GST/HST on this
expenses that are considered non-taxable benefits are
benefit even if you could not claim an ITC on the purchase
discussed in “Moving expenses and relocation benefits”
of the passenger vehicle.
on page 27
Examples for remitting GST/HST on employee benefits
■ During the same GST/HST reporting period, you make a
supply of the property or service to an employee or their The following examples will help you apply the rules for
relative for consideration that becomes due in that period remitting the GST/HST on employee benefits.
and that is equal to its fair market value
Automobile benefit – See examples in the section on
“Automobile benefits – standby charges, operating expense
benefit, and reimbursements” on page 40.

42 canada.ca/taxes
Motor vehicle benefit – A Prince Edward Island employer The value of the taxable benefit for personal use of the cell
provided a motor vehicle to an employee who drove it for phone for the year is $617. The employee reimbursed the
personal and business use. The employer is not a large employer $200 for the cell phone in December. The amount
business on December 31, 2021. The taxable benefit for the of the benefit shown on the T4 is $417.
personal use is $5,100. As Prince Edward Island is a
As Manitoba is a non-participating province, the GST
participating province, the HST considered to have been
considered to have been collected is calculated as follows:
collected is calculated as follows:
GST considered to have been collected on the cell phone
HST considered to have been collected on the motor
benefit = $417 × 4/104 = $16.04
vehicle benefit = $5,100 × 14/114 = $626.32
GST collected for the reimbursement – $200 × 5/105 = $9.52
You are considered to have collected the HST in the amount
of $626.32 at the end of February 2022. You have to include In this situation you have to include the GST for the
this amount on your GST/HST return for the reporting reimbursement in your GST return for the reporting period
period that includes the last day of February 2022. that includes the date of the reimbursement (December) =
$200 × 5/105 = $9.52. You are considered to have collected
Note
the GST on the cell phone benefit in the amount of $16.04 at
The calculation of the amount of GST/HST you are
the end of February 2022. You have to include this amount
considered to have collected on the motor vehicle benefit
on your GST/HST return for the reporting period that
differs from that of an amount calculated on an
includes the last day of February 2022.
automobile benefit.
Long-service award – You bought a watch for $560
Subsidized Meals – An Ontario employer provides
(including the GST/HST and PST) for your employee to
subsidized meals to employees (such as in an employee
mark the employee’s 25 years of service. It was the only gift
dining room or cafeteria), and the employee does not pay
or award provided to the employee in the year. You
any amount for these meals. The cost of food, preparation
reported a taxable benefit of $60 in box 14 and under
and service for employees over the course of the year is
code 40 on the employee’s T4 slip.
$2,052 including HST. The ITCs will not be restricted on
property or services purchased to make supplies of meals if There is no GST considered to have been collected on the
the employer is acquiring the property or service generally long service award.
for the use of employees, but not specifically for any
particular employee. In this situation, you cannot claim an ITC because you
bought the watch for the employee’s exclusive personal use
As Ontario is a participating province, the HST considered and enjoyment. Therefore, there is no GST/HST to remit on
to have been collected is calculated as follows: the benefit.
HST considered to have been collected on the subsidized Special clothing – You provided safety footwear designed
meals benefit = $2,052 × 12/112 = $219.86 to protect your employee from hazards associated with
their employment. The footwear is not considered to be a
You are considered to have collected the HST in the amount
taxable benefit for the employee, so you are not considered
of $219.86 at the end of February 2022. You have to include
to have collected the GST/HST on the footwear and you do
this amount on your GST/HST return for the reporting
not have to remit any tax. However, you can claim an ITC
period that includes the last day of February 2022.
for any GST/HST that you paid for the footwear.
Cell phone – An employer located in Manitoba provides
There is no GST considered to have been collected on the
the general manager of the company with a cell phone both
special clothing.
for business and personal use.

canada.ca/taxes 43
Benefits chart
This chart indicates whether you need to deduct Canada Pension Plan (CPP) and employment insurance (EI) from the
taxable allowances and benefits discussed in this guide, and shows which codes you should use to report them on the
employee’s T4 slip. The chart also indicates whether the GST/HST has to be included in the value of the taxable benefit for
income tax purposes. Cash reimbursements and non-cash benefits are subject to GST/HST, unless they are for exempt or
zero-rated supplies. Cash allowances are not subject to GST/HST.

Deduct Deduct Code for Include

Taxable allowance or benefit
CPP1 EI T4 slip GST/HST

Automobile and motor vehicle allowances – in cash yes yes 40 no

Automobile standby charge and operating expense benefits – non-cash yes no 34 yes
2 3
Board and lodging, if cash earnings also paid yes 30
Cellular phone and Internet services – in cash yes yes 40 yes
Cellular phone and Internet services – non-cash yes no 40 yes
4
Child care expenses – in cash yes yes 40
4
Child care expenses – non-cash yes no 40
5
Counselling services – in cash yes yes 40
5
Counselling services – non-cash yes no 40
6
Disability-related employment benefits – in cash yes yes 40
6
Disability-related employment benefits – non-cash yes no 40
Discounts on merchandise and commissions on sales – non-cash yes no 40 yes
Educational allowances for children – in cash yes yes 40 no
Employment insurance premium rebate – in cash yes yes 40 no
Gifts and awards – in cash yes yes 40 no
Gifts and awards – non-cash and near-cash yes no 40 yes
Group term life insurance policies – employer-paid premiums – non-cash yes no 40 no
7
Housing allowance, clergy – in cash yes 30 no
8
Housing allowance – in cash yes yes 30
7 9 8
Housing benefit, clergy, rent-free or low-rent – non cash 30
9 8
Housing benefit, rent-free or low-rent – non cash yes 30
Housing loss – in cash yes yes 40 no
Interest-free and low-interest loans yes no 36 no
Loans – Home purchase yes no 36 no
Loans – Home relocation yes no 36 no
Loans – Forgiven – in cash yes yes 40 no
Meals – Overtime allowances – in cash yes yes 40 no
Meals – Overtime – in cash yes yes 40 yes
Meals – Overtime – non-cash yes no 40 yes
Meals – subsidized – non-cash yes no 40 yes
10
Medical expenses – in cash yes yes 40
10
Medical expenses – non-cash yes no 40
Continued on next page

1
Except for security options, if a non-cash taxable benefit is the only form of remuneration you provide to your employee, there is no remuneration
from which to withhold deductions. For more information, see “Calculate payroll deductions,” on page 7.
2
If no cash earnings are paid in a pay period, do not deduct EI premiums.
3
Meals and short term accommodations are generally subject to the GST/HST. If taxable, include the GST/HST in the value of the benefit.
4
Child care expenses are generally exempt of GST/HST. If taxable, include the GST/HST in the value of the benefit.
5
Certain counselling services are subject to the GST/HST. If the services you pay are subject to the GST/HST, include the GST/HST in the value of
the benefit.
6
Disability-related employment benefits are generally taxable for GST/HST. If taxable, include the GST/HST in the value of the benefit.
7
If you reduce the income used to calculate income tax deductions by the amount of the clergy residence deduction (including utilities), you may
also reduce the pensionable earnings used to calculate CPP contributions by the same amount.
8
Long-term accommodations are generally exempt of GST/HST and utilities are generally subject to the GST/HST. If taxable, include the
GST/HST in the value of the benefit.
9
If it is a non cash benefit, it is insurable if it is received by the employee in addition to cash earnings in a pay period. If no cash earnings are paid in
the pay period, it is not insurable.
10
Some medical expenses are subject to the GST/HST. For more information, see page 27.

44 canada.ca/taxes
 Deduct Deduct Code for Include
Taxable allowance or benefit (continued)
CPP EI T4 slip GST/HST

Moving expenses and relocation benefits – in cash yes yes 40 yes

Moving expenses and relocation benefits – non-cash yes no 40 yes
Moving expenses – non-accountable allowance over $650 – in cash yes yes 40 no
Municipal officer’s expense allowance yes no 40 no
Parking – in cash yes yes 40 no
Parking – non-cash yes no 40 yes
Pooled registered pension plan contributions (paid to a plan not registered with the Minister of
yes yes 40 no
National Revenue)
Power saws and tree trimmers; rental paid by employer for employee-owned tools – in cash yes yes 40 yes
Premiums for income maintenance plans and other insurance plans – non cash yes no 40 no
Premiums under provincial hospitalization, medical care insurance, and certain federal
yes yes 40 no
government plans – in cash
Premiums under provincial hospitalization, medical care insurance, and certain federal
yes no 40 no
government plans – non-cash
11
Professional membership dues – in cash yes yes 40
11
Professional membership dues – non-cash yes no 40
Recreational facilities (in house) – non-cash yes no 40 yes
Recreational facilities or club membership dues – in cash yes yes 40 yes
12
Registered retirement savings plan (RRSP) contributions – in cash yes 40 no
11
Registered retirement savings plan (RRSP) administration fees – non-cash yes no 40
Scholarships and bursaries – in cash yes yes 40 no
13
Security option (cash-outs) Yes Yes no
13
Security options yes no no
Social events – in cash yes yes 40 no
Social events – non-cash yes no 40 yes
Spouse or common-law partner’s travelling expenses – in cash yes yes 40 no
Spouse or common-law partner’s travelling expenses – non-cash yes no 40 yes
12
Tax-Free Savings Account – contributions – in cash yes 40 no
11
Tax-Free Savings Account – administration fees – non-cash yes no 40
Tickets yes no 40 yes
Tool allowance – in cash yes yes 40 no
Tool reimbursement – in cash yes yes 40 yes
Transportation passes – in cash yes yes 40 yes
Transportation passes – non-cash yes no 40 yes
Transportation to and from the job – in cash yes yes 40 yes
Transportation to and from the job – non-cash yes no 40 yes
Travel assistance in a prescribed zone – in-cash yes yes 32 yes
Travel assistance in a prescribed zone – non-cash yes no 32 yes
Travelling allowances other employees, unreasonable yes yes 40 no
11
Tuition fees – in cash yes yes 40
11
Tuition fees – non-cash yes no 40
Uniforms and protective clothing – in cash yes yes 40 yes
Uniforms and protective clothing – non-cash yes no 40 yes
7
Utilities allowance, clergy – in cash yes 40 no
Utilities allowance – in cash yes yes 40 no
7 8
Utilities benefit, clergy – non cash no 40
8
Utilities benefit, rent-free or low-rent – non cash yes no 40

11
Certain fees and certain contributions are subject to the GST/HST. If the fees or the contributions you pay are subject to the GST/HST, include
the GST/HST in the value of the benefit.
12
You may not have to deduct EI premiums on some RRSP and TFSA contributions. For more information, see pages 30 and 33.
13
Enter the taxable security option benefit under code 38. If eligible, enter the amount of the security options deduction under code 86 and either
code 39 or 41, as applicable.

canada.ca/taxes 45
Digital services
Handling business taxes online CRA BizApp
Use the CRA’s digital services for businesses throughout CRA BizApp is a mobile web app that offers secure access
the year to: for small business owners and sole proprietors to view
accounting transactions, pay outstanding balances, make
■ apply for COVID-19 support payments interim payments, and more.
■ make a payment to the CRA online with My Payment or You can access CRA BizApp on any mobile device with an
a pre-authorized debit (PAD), agreement or create a QR Internet browser—no app stores needed! To access the app,
code to pay in person at Canada Post go to canada.ca/cra-mobile-apps.
■ request a payment search
Receiving your CRA mail online
■ file or amend information returns without a web access
code Sign up for email notifications to find out when your CRA
mail, like your PD7A – Statement of account for current
■ submit documents to the CRA source deductions, is available online.
■ authorize a representative for online access to your For more information, go to canada.ca/cra-business-email
business accounts -notifications.
■ register to receive email notifications and to view mail
from the CRA in My Business Account Authorizing the withdrawal of a
pre-determined amount from your Canadian
■ manage addresses
chequing account
■ manage direct deposit information PAD is a secure online, self-service, payment option for
■ view and pay account balance individuals and businesses to pay their taxes. A PAD lets
you authorize withdrawals from your Canadian chequing
■ calculate instalment payments account to pay the CRA. You can set the payment dates and
■ provide a nil remittance amounts of your PAD agreement using the CRA’s secure
My Business Account service at canada.ca/my-cra
■ transfer a misallocated payment -business-account, or the CRA BizApp at canada.ca/cra
■ download reports -mobile-apps. PADs are flexible and managed by you. You
can use My Business Account to view historical records and
To log in to or register for the CRA’s digital services, go to: modify, cancel, or skip a payment. For more information,
go to canada.ca/pay-authorized-debit.
■ My Business Account at canada.ca/my-cra-business
-account, if you are a business owner
■ Represent a Client at canada.ca/taxes-representatives, if
you are an authorized representative or employee
For more information, go to canada.ca/taxes-business
-online.

46 canada.ca/taxes
For more information
What if you need help? ■ RC4157, Deducting Income Tax on Pension and Other
Income, and Filing the T4A Slip and Summary
If you need more information after reading this guide, go
to canada.ca/taxes or call 1-800-959-5525. ■ T4001, Employers’ Guide – Payroll Deductions and
Remittances
Addresses ■ RC18, Calculating Automobile Benefits
Tax services offices
To find out where to send your requests,
Tax Information Phone Service (TIPS)
go to canada.ca/cra-offices or call 1-800-959-5525. For tax information by telephone, use our automated
service, TIPS, by calling 1-800-267-6999.
Tax centres
Prince Edward Island Tax Centre Teletypewriter (TTY) users
275 Pope Road If you have a hearing or speech impairment and use a TTY,
Summerside PE C1N 6A2 call 1-800-665-0354.
Jonquière Tax Centre If you use an operator-assisted relay service, call our
2251 René-Lévesque Boulevard regular telephone numbers instead of the TTY number.
Jonquière QC G7S 5J2
Shawinigan-Sud Tax Centre Complaints and disputes
4695 Shawinigan-Sud Boulevard
Shawinigan-Sud QC G9P 5H9 Service complaints
You can expect to be treated fairly under clear and
Sudbury Tax Centre established rules, and get a high level of service each time
Post Office Box 20000, Station A you deal with the Canada Revenue Agency (CRA). For
Sudbury ON P3A 5C1 more information about the Taxpayer Bill of Rights, go
Winnipeg Tax Centre to canada.ca/taxpayer-rights.
66 Stapon Road If you are not satisfied with the service you received:
Winnipeg MB R3C 3M2
1. Try to resolve the matter with the CRA employee you
have been dealing with or call the telephone number
Direct deposit provided in the CRA’s correspondence. If you do not
Direct deposit is a fast, convenient and secure way to get have contact information, go to canada.ca/cra-contact.
your CRA payments directly into your account at a
financial institution in Canada. For more information and 2. If you have not been able to resolve your service-related
ways to enrol, go to canada.ca/cra-direct-deposit. issue, you can ask to discuss the matter with the
employee’s supervisor.

Forms and publications 3. File a service complaint by filling out Form RC193,
Service Feedback. For more information and how to file a
The CRA encourages electronic filing of your return. If you complaint, go to canada.ca/cra-service-feedback.
need a paper version of the CRA's forms and publications, go
to canada.ca/cra-forms-publications or call 1-800-959-5525.
If you are not satisfied with how the CRA has handled your
service-related complaint, you can submit a complaint with
Electronic mailing lists the Office of the Taxpayers’ Ombudsperson.
The CRA can notify you by email when new information on
a subject of interest to you is available on the website. To Formal disputes (objections and appeals)
subscribe to the electronic mailing lists, go to canada.ca/cra If you disagree with an assessment, determination, or
-email-lists. decision, you have the right to register a formal dispute.
For more information about objections and formal disputes,
Related publications and related deadlines, go to canada.ca/cra-complaints
■ GST/HST Memorandum 9.1, Taxable Benefits (Other -disputes.
than Automobile Benefits)
■ GST/HST Memorandum 9.2, Automobile Benefits Reprisal complaints
If you have previously submitted a service complaint or
■ RC4110, Employee or Self-Employed? requested a formal review of a CRA decision and feel you
■ RC4120, Employers’ Guide – Filing the T4 Slip were not treated impartially by a CRA employee, you can
and Summary submit a reprisal complaint by filling out Form RC459,
Reprisal Complaint.

canada.ca/taxes 47
For more information about complaints and disputes, For penalties, the CRA will consider your request only if it
go to canada.ca/cra-complaints-disputes. relates to a tax year or fiscal period ending in any of the 10
calendar years before the year in which you make your
Due dates request. For example, your request made in 2020 must
relate to a penalty for a tax year or fiscal period ending in
When the due date falls on a Saturday, Sunday, or public 2010 or later.
holiday recognized by the CRA, your payment is
considered on time if the CRA receives it or if it is For interest on a balance owing for any tax year or fiscal
postmarked on or before the next business day. period, the CRA will consider only the amounts that
accrued during the 10 calendar years before the year in
For more information, go to canada.ca/payroll and click on which you make your request. For example, your request
“Important dates for payroll.” made in 2020 must relate to interest that accrued in 2010 or
later.
Cancel or waive penalties or interest To make a request, fill out Form RC4288, Request for
The CRA administers legislation, commonly called Taxpayer Relief – Cancel or Waive Penalties or Interest. For
taxpayer relief provisions, that allows the CRA discretion to more information about relief from penalties or interest and
cancel or waive penalties or interest when taxpayers cannot how to submit your request, go to canada.ca/cancel-waive
meet their tax obligations due to circumstances beyond -penalties-interest.
their control.
The CRA’s discretion to grant relief is limited to any period
that ended within 10 calendar years before the year in
which a request is made.

48 canada.ca/taxes