Employee Benefits Flashcards
Salary is taxed on
Amount paid at regular intervals reported on a cash basis
NON CASH GIFTS are tax free up to?
Non-Cash Gifts; non-taxable providing the total cost of the awards/gifts does not exceed $500.
Long-Service/Anniversary Award is non taxable if:
a separate award may qualify as non- taxable upto $500 AND is for a minimum 5 years of
7 non taxable benefits
Employer Contributions to a
- RPP
- Private health services plan (“PHSP”)
- Employer contribution for an employee to a pooled RPP
- Deferred profit-sharing plan (“DPSP”)
- Group sickness or accident insurance (tainted- taxable- if employer pays all or portion of premium)
- Supplementary unemployment benefit plan, and Counseling services
- Benefits for counselling services for mental health and reemployment/retirement
- Education Assistance, if dealing at arm’s length and reasonable that it is not a substitute for salary or wages
TAX EXEMPT BENEFITS
- Discounts on merchandise
- Subsidized meals
- Uniforms and special clothing
- In house recreational facilities
- Club dues, which it is clearly to the employer’s advantage to be a member of the club
- Internet at home – providing primary benefit is to the employer
- Cell phones and computers – primarily
for business purpose - Tuition/Training costs reimbursed – if course primarily benefit the employer
- $650 moving allowance- if related to an employer required move
Non-Taxable allowance Income From Employment: selling property or negotiating contracts
Travel expenses include transportation, meals, lodging, and other incidental costs
The allowance must be reasonable:
- if unreasonably high or low in relation to the actual costs incurred, the allowance is taxable
Non-Taxable Income From Employment: Employees other than Salespeople Travel allowance is considered tax-free only if:
The employee travels outside the municipality or metropolitan area in which the employer is located if not relating to the use of an automobile
Automobile allowances are considered tax-free if:
The allowance is for the purpose of travelling in the performance of their duties as employees; and, The allowance is reasonable
- ITA (6)(1)(b)(vii.1) based solely on the
number of kilometres. (0.33 per km)
Non-Taxable Income From Employment: Employee Owned Automobile- Allowance and Reimbursement
Allowance
- Taxable under Section 6
- Deduct automobile expenses, based on %age use of
auto
Reimbursement
- Taxable, unless REASONABLE, and deduct automobile expenses, based on % use of auto
- Reasonable = solely based on km used for employer benefit (for 2023,$.68/km on first 5,000 km and $.62/km, thereafter)
- If Reasonable, not taxable but no auto expenses can be claimed- consider including in income and then deduct auto expenses
Non-Taxable Income From Employment: Overtime Meals and Allowances
- Employee works two or more hours of
overtime after scheduled hours - Must be infrequent and occasional (less than three times a week)
Stand-by Charge employer own
A
– X [2% X (C X D) + 2/3(E – F)]
B
A = lesser of:
Total personal-use kms driven during the time period, and
Value determined for B during the days the automobile is available;
B = 1,667 km x (total available days/30)-A/B formula rounded
C = full original cost of an employer-owned vehicle, including HST
D = Number of months –rounded (total available days when
employer owned the automobile / 30)
E = lease payments, including HST, made by employer
F = portion of the lease payments which pertains to insurance for loss or damages
Note 1- A is equal to B unless meet the following conditions: a) required to use the car for duties of employment, and; b) car used primarily (>50%) for duties of employment
Stand-by Charge reduction
A
– X (standby formula of owned/leased)
B
A = lesser of:
Total personal-use kms driven during the time period, and
Value determined for B during the days the automobile is available;
B = 1,667 km x (total available days/30)-A/B formula rounded=20,004 for full year
: required to use the car for duties of employment, and
car used primarily (>50%) for duties of employment
Stand-by formula for employer owned
[2% X (C X D)
C = full original cost of an employer-owned vehicle, including HST
D = Number of months –rounded (total available days when
employer owned the automobile / 30)
Stand-by formula for employer leased
2/3(E – F)]
E = lease payments, including HST, made by employer
F = portion of the lease payments which pertains to insurance for loss or damages
Operating Cost Benefit
for fuel, insurance, maintenance, 33¢ (inclusive of HST) per personal-use kilometre
or
1/2 of standby charge if:
- notify in writing; and
- >50% business use.
deduct employee reimbursement to employer
Employer loans are taxed by
loan amount * prescribed interest rate - interest paid on loan during the year and up to January 30 of the following year
