Tax-free savings account (TFSA)

You may offer your employees and their spouses the opportunity to participate in a group TFSA. Contributions you make to your employees' TFSA for them, as well as TFSA administration fees that you pay for them, are considered to be a taxable benefit for the employees. However, this does not include any amount you withheld from the employees' remuneration and contributed for the employees.

Contributions you make to your employees' TFSA for them are generally paid in cash and are taxable, pensionable, and insurable. Deduct income tax, CPP contributions and EI premiums.

Administration fees that you pay directly for an employee are taxable and pensionable. Deduct CPP and income tax. These are considered a non-cash benefit, so they are not insurable. Do not deduct EI premiums.

If the GST/HST applies to the administration fees, include it in the value of the benefit.

Payroll deductions

Contributions you make to your employee's TFSA for them are generally paid in cash and are taxable, pensionable, and insurable. Deduct income tax, CPP contributions and EI premiums.

Administration fees that you pay directly for an employee are taxable and pensionable. Deduct CPP and income tax. These are considered a non-cash benefit, so they are not insurable. Do not deduct EI premiums.

Reporting the benefit

Report the taxable amount in box 14 "Employment income" and in the "Other information" area under code 40 at the bottom of the T4 slip. For more information, see T4 – Information for employers.

Related topics

• The TFSA annual information return
• The Tax-Free Savings Account