Allowance, Expenses & Benefits

Outline

Taxable cash allowance & Taxable expense reimbursements subject to all stat deductions

Non-cash benefits

Cash benefits

employer pays for the benefits to the 3rd party

subject to all stat except EI, QPIP

employer reimburses employees for the benefits they bought themselves

subject to all stat deductions

Allowance

For the use, or anticipated use, of staff's personal property for business purposes

Taxable allowances subject to all stat deductions

Non-taxable allowance: not include in employee income & not subject to stat deductions

Car allowance

Reimburse a staff for the sue of their personal auto for business

include: portion of gas, maintenance costs & extra wear on the auto

Reasonable Care allowance

CRA & RQ decide

Meet all the conditions

  1. $/km follows govern. guidelines
  • 0.55/km in 5000 km / year
    (0.59/km in YK, NT, NU)
  • 0.49/km thereafter
    (0.53/km in YK, NT, NU)
  1. not reimburse same use of the auto
  1. Based solely on business km

exclude from income, no stat deductions

Unreasonable car allowance

Flat amount not based solely on business km

$/km > or < govern guidelines

credit card or reimbursement for gas purchase

include in income, subject to all stat deductions

Combination allowance

if 2 allowances paid for the same use of the auto, both unreasonable, e.g., flat fee + $/km

if $/km for out of province, flat fee for in province, then $/km as reasonable, flat fee as unreasonable

Meal

Overtime Meal allowance

Meal Expense

Unreasonable: include from income & subject to stat dedutions

Non-taxable

CRA

  1. work ≥ 2 hrs overtime before / after scheduled
  1. infrequent & occasional: <3 / week;
    occasional basis, e.g. big project, can be ≥3 /week
  1. Cost ≤ $17

RQ

  1. ≥2 hr consecutive overtime
  1. reimburse with receipts
  1. at employer's request

exclude from income, Not subject to stat deductions

meal expenses when conduct business / on business trip

exclude from income

reimburse from AP

Clothing allowance

  1. cost is reasonable
  1. rarely & occasional

Distinctive Uniform & Special Clothing

Taxable allowance / expense: free to choose what they will wear

Decide taxability

needed for protection from hazards in work?

a required distinctive uniform?

reimburse these with receipts is Reimbursement of Expenses, non-taxable

Reimburse without receipts, non-taxable if all meet

employer's cost to supply these is non-taxable

  1. the staff bought it
  1. law requires to wear
  1. amount is reasonable

non-taxable if reimburse for the cleaning or laundering of the clothing, even if without a receipt

Personal Living expense

E.g.: travel from home to office

subject to all stat deductions

Expense reimbursement: to cover expense for performing the job

Benefits

Non-Cash taxable benefits: all stat but no EI, QPIP

Cash taxable benefits: all stat

provide to staff

pay to 3rd party for staff

reimburse staff for the benefits they bought by themselves
e.g., board when paid with other income

RRSP

usu. cash taxable

non-cash taxable, if:

  1. cannot withdraw until retire or not employed OR
  2. allow to withdraw only under Home Buyer's Plan or Lifelong Learning Plan

taxable benefits may or may not be subject to additional sales taxes

Non-taxable benefits: not income, no stat deductions

Group Term Life Insurance Plans

Taxable benefit / period

2: Monthly taxable benefit = (coverage amount x premium rate) ÷ 1,000

3: Taxable benefit / period = (monthly taxable benefit x 12) ÷ period frequency

1: Coverage amount = annual salary x coverage multiplier
Round coverage amount up to nearest $1,000

GST (Goods & Service tax)

exempt from GST except MB, ON, QC

MB, ON: 8% (RST)

QC: 9%

Group Sickness and Accident Insurance Plan

STD, LTD

AD&D (accident death & dismemberment)

The group plans pay staff for a period of time when absent from work for sickness or accident

non-group plan: only for one or a few staff: Non-cash taxable benefit

Group plan for all staff or an association: Non-taxable benefit

Non-cash taxable benefit

add GST: MB & ON-8%, QC-9%

Private Health Insurance Pans

supplement universal health care system in provinces

QC

non-QC

Non-cash taxable benefit + 9% tax on premiums

Non-taxable benefit

Reimbursement of health expense

Non-cash taxable benefit: reimburse from insurance company, but insurance company is paid directly by employer

Cash taxable benefit: reimburse from employer

Non-taxable benefit: reimburse from insurance company directly

Provincial Health Insurance Plans
only in BC

Cash taxable benefit: employee pays premiums and get reimburse from employer

$/month: 1-$75, 2-$136, ≥3-$150

Non-cash taxable benefit: premiums from employer paid directly to the health plan

MB, NL, ON, QC: health care taxes on employers, no deduction cost on employees

AB, NB, NS, NT, NU, PE, SK, YK: general tax revenue

Employee Assistance Plans

Non-taxable benefit

Personal financial / legal counseling fees: Non-Cash taxable benefit

Confidential counseling services

Not subject to GST

fees paid to provider by employer: Non-taxable

fees paid to provider by staff and get reimburse from employer: Cash taxable benefit - & subject to GST

Kinds

family counseling, e.g., marital, behavioral issues, grief

physical & mental health, e.g,. stress manage, chemical dependency

even paid by employees & reimbursed by employer

re-employment for to-be terminated employees, e.g., job placement counseling

retirement counseling

physical / mental health counseling, e.g., tobacco, drug/alcohol abuse, stress managment

Gifts & Awards

CRA

RQ

Gift: for birthday, birth, wedding, religious holiday
Award: for length of service, exceeding standards

Non-cash long service / anniversary award

Near cash gift or award

Non-cash gifts & awards

Gift certificates, gift coupons, smart cards used to buy goods or services from a particular business or a list of business: non-taxable

≤$500 Non-taxable benefits

$500, Non-Cash taxable benefits

no limit to no.

1st award: ≥5 yr; next: ≥5 yr after previous one

award ≤$500: Non-taxable

$500: Non-Cash taxable

if award <$500, the shortfall cannot be added to the annual $500 exemption

Non-cash taxable benefit

gift certificates, gift cards, gold nuggets, stocks, any item easily converted to cash

Cash gift & award

Cash taxable benefit

not subject to GST/QST/HST

subject to GST/QST/HST

subject to GST/QST/HST

cash

Non-Cash gifts & awards

Cash taxable benefits

≤$500 of Gift: Non-taxable

≤$500 of Awards: Non-taxable

no limit to no.

long-service awards are included in general awards

taxable expense reimbursement