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
- $/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)
- not reimburse same use of the auto
- 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
- work ≥ 2 hrs overtime before / after scheduled
- infrequent & occasional: <3 / week;
occasional basis, e.g. big project, can be ≥3 /week
- Cost ≤ $17
RQ
- ≥2 hr consecutive overtime
- reimburse with receipts
- 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
- cost is reasonable
- 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
- the staff bought it
- law requires to wear
- 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:
- cannot withdraw until retire or not employed OR
- 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