Tax Changes to Employee Benefits

Employees, spouses of employees, and children of employees can receive benefits of a personal nature from an employer. These benefits may be taxable if they meet specific criteria set out by the Canada Revenue Agency (CRA). If the benefits are taxable, they must be included in the income for the employee.

There was a media storm over some proposed changes from the CRA in 2017—they intended to tax all employee discounts as income; that has since been clarified by the federal government to assure taxpayers that the CRA will NOT be taxing all employee discounts. Employee discounts will be taxed as income as they have been in the past—i.e. they need to meet the criteria for being taxable benefits.

From Canada Revenue Agency, 

If you provide benefits to your employees, you always have to go through the same steps. If a step does not apply to you, skip it and go on to the next step:

• determine if the benefit is taxable
• calculate the value of the benefit
• calculate payroll deductions
• file an information return

There are, however, some changes to how employee benefits will be taxed. Again, from the CRA website: 

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 2017 or as of the dates given. 

Group term life insurance policies - Employer paid premiums

The CRA established a threshold ($50) for reporting Group Term Life Insurance premiums paid on behalf of retirees when it’s the only income reported on the T4A slip. For more information, go to Group term life insurance policies – Employer-paid premiums.

Home relocation loan deduction

Effective January 1, 2018 and later years, the home relocation loan deduction will be eliminated. For more information, go to Home-relocation loans.

Municipal officer’s expense allowance

For 2019 and later tax years, the full amount of the non‑accountable allowances paid to elected officers will be included in their income. For more information, go to Municipal officer's expense allowance.

Social events

Beginning in 2018, the threshold for reporting employee benefits derived from employer-sponsored social events will be increased to $150. For information, go to Social events. 

Transit passes

As of July 1, 2017 the public transit tax credit has been eliminated. For more information, go to Transit passes.

Still not sure if you’re eligible for a deduction under the new rules? It might be time to give your accountant a call.

Contact Shaw & Associates Chartered Accountants to help you out with your financial needs and tax planning and to give you the advice and services that will take you from where you are to where you want to be with your business. One complimentary meeting with us will put you and your business on a more profitable and positive path.