Hello. Thank you for joining us for this
webinar about automobile and motor vehicle benefits and
allowances. Today's webinar is the second in a
four part series relating to taxable benefits. Also,
I would like to mention that today's webinar
will be recorded and posted on the Canada
Revenue Agency CRA website at a later date.
Today we will be discussing personal driving, keeping
records, automobile versus motor vehicles, going through some
of the benefit calculations,
and looking at the different types of allowances
employers may pay. Generally speaking, if an employer
gives their employees something they can use for
their own benefit outside of the employment context,
the employee has received a taxable benefit. The
same concept applies to vehicles provided by employers.
If their employees or shareholders use company assets
for their personal benefit, then the value of
the benefit is required to be included
in employees' or shareholders' income. The Income Tax
Act has specific provisions for calculating automobile benefits.
First, I want to start of by saying
that no matter how the vehicle is defined,
whether owned or leased, the rules for personal
driving and keeping records are the same. Let's
spend some time on personal driving and keeping
records and log books, before talking about automobiles
and motor vehicles, because as
mentioned before, the same rules apply to both.
Employees and employers often have a different notion
than that of the CRA on what is
employment-related use of employers' owned or leased vehicles
versus personal use. So what constitutes personal driving,
or more specifically, personal use? The personal use
of an employer vehicle is basically any use
that is not employment related.
As simple as that may sound, there is
still some confusion as to what is employment-related
use and what is not. Obviously any driving
employees do during the course of the work
day that is part of their duties of
employment is considered employment-related use. For example, travel
between the employer's office building and an employer
warehouse throughout the work day. It is just
as obvious that when employees use an employer
vehicle to take
their families to the movies, go on vacation,
or run personal errands, it is not considered
employment-related use. In between those two extremes are
grey areas, one of those being travel between
home and work. The drive between employees' place
of residence and their regular place of work
using a company vehicle is a personal activity.
That is sometimes hard for some people to
understand because employees won't be making this trip
if it were not for
their employment responsibilities. This is, however, a long-standing
position taken by the CRA and supported by
courts. Also, one thing to keep in mind
is that while some employees use company vehicles
to travel between work and home, other employees
who do not have the use of a
company vehicle have to pay the cost of
getting to work out of their own pocket.
There are times when an employee may be
required to take an employer
provided vehicle home at night. At the same
time, the employer can restrict the employee's use
of the vehicle for only travelling between work
and home. These situations may occur for reasons
such as the vehicle is specially equipped for
the performance of the job duties there are
security concerns for the equipment or the employee
is on call for emergencies. Whatever the reason,
when the employee drives home or drives to
work using the employer-vehicle,
the specific purpose of that drive is personal.
Restrictions placed on the vehicle do not cancel
the taxable benefit. Basically, getting to work is
an employee's responsibility. There are a few exceptions
to this rule that we will look at
shortly. Let's look at some examples of personal
driving on the next slide. An inspector performs
an employment related duty such as road inspection
on the way home.
A manager regularly travels between their residence and
the various stores within their region, including the
head office. Meter readers travel from home to
various employer locations to read meters. In all
three of these scenarios, the first and last
trip from and to home would be personal
travel. Performing an employment related duty, such as
road inspections, on the way home does not
change the fact that the primary
purpose of the employee's trip is to go
home. Trips between employer locations are considered business-related.
The CRA has some administrative policies that will
consider travel to be business-related even though it
is truly personal. A few examples are shown
on the slide. But remember, just because you
are going to a business appointment first thing
in the morning, the trip home from the
office the previous evening
does not become employment-related, it is personal. They
are two separate trips. I'd like to spend
a couple of minutes now talking about the
last bullet on this slide. 'An employee travels
directly between home and a point of call
other than a regular place of work, such
as a salesperson.' There may be situations when
the employee is required to proceed from home
to a point of call. A point of
call is not a regular place of employment.
It's just simply a place
that the employee is going to attend so
infrequently that we cannot characterize it as a
regular place of employment. So, when you have
an employee, such as a salesperson, travelling from
home to a point of call, that distance
is business-related. If the employee then continues on
from that point of call into the office,
that's also business-related. When you're looking at different
journeys, or multiple work locations,
it's important to break the trip into segments
to determine which part is personal and which
part is business-related. What is a regular place
of employment? A regular place of employment is
any location at which or from which the
employee regularly, as a rule, reports for work.
It's a work location where employees, in connection
with their duties, file reports, receive instructions or
employment information,
or perform other employment-related duties. Travel to that
location from their home is personal. For example,
if employees report to an office, that office
is their regular place of employment. If employees
normally report to a warehouse, their regular place
of employment is the warehouse. The CRA may
consider the regularity of the employee reporting to
a certain location and the nature of their
duties when determining
whether a location is a regular place of
employment. In some situations, it's difficult to determine
if employees' work location is a regular place
of employment. So it may not be clear
whether their travel is personal in nature. Sometimes
due to the nature of their work, some
employees with multiple regular places of employment might
have to travel more to and from work
than employees with only one regular place of
employment. The deciding
factor is what duties employees perform at each
of these locations as well as the frequency
and regularity of travel to these specific locations.
It should be noted that the place can
change from time to time because of the
nature of employment. It's a good idea to
review these work places throughout the year. The
CRA consistently runs into situations where logs have
not been kept. While the Income Tax Act,
or the Act, does not set out specific
document requirements for recording usage of a vehicle,
the general rule is that an individual must
keep records to determine the business and personal
kilometres of a vehicle. The best evidence of
vehicle use is a logbook. Employers, employees, and
shareholders all have a role to play to
make sure proper records are kept. The format
of these records can be whatever arrangement the
employee and the
employer are comfortable with either on a computer
or paper. From the records the employer should
be able to determine the number of days
the vehicle is available to the employee the
total business kilometres driven in the year the
personal kilometres and any reimbursements by the employee
paid to the employer. Even if the personal
use of the employer-provided vehicle is zero, logs
still need to be kept. They're proof of
the zero
personal driving of that particular vehicle during the
year. The employer has to keep on record
the cost of the vehicle or the leasing
agreement operating expenses, and things of that nature.
Also, employee logs will be part of the
employer's overall records that must be kept for
automobile and motor vehicle benefits. Without these records,
it's difficult for the employer to properly calculate
the employee's taxable benefit.
What happens if there's no logbook? It is
the CRA's general position that in the absence
of a logbook or daily record of personal
use versus business use, the personal use is
assumed to be 20,004 kilometres a year or
1,667 per month. However, the CRA will give
employers the opportunity to reconstruct their records for
the period under review. The employer can interview
the employee
or look at any maintenance records, insurance renewals,
gas receipts, or appointment books to reconstruct the
records and determine personal use. If the personal
versus business use can be properly substantiated, the
CRA will accept the statements the employer provides.
If you have a situation where an employee
driving an employer-provided vehicle refuses to keep logs,
you as the employer can use the 20,004
kilometres
to calculate the taxable benefit. It is a
good business practice to check the employees' logs
throughout the year to make sure proper records
are kept. Don't wait until the end of
the year to find out that important information
is missing. Now that we've covered personal use
and keeping records and log books, I'd like
to talk about automobiles versus motor vehicles. How
the taxable benefit is calculated will depend on
whether the employer-provided
vehicle is an automobile. So, what is it
and what is not an automobile? The term
automobile is defined in the Act. According to
the definition in the Act, an automobile is
a motor vehicle that is designed or adapted
mainly to carry individuals passengers on streets and
highways, and has a seating capacity of not
more than the driver and eight passengers. Generally,
if the vehicle
has a back seat or is an extended
cab, it is considered an ?automobile'. In other
words, an automobile is a vehicle that is
designed to be used as an ordinary passenger
type vehicle. The definition of an automobile in
the Act also applies to all vehicles regardless
of how the back part of the vehicle
or the trunk is used. An example of
this would be - Most minivans are designed
as passenger vehicles and fall within
the definition of automobile. They usually have a
feature that allows them to be converted to
carry more cargo, for example, the back seat
that can be folded down or removed. As
long as the back seat can be easily
put back, these vans are considered automobiles. On
the other hand, if a minivan is customized
by permanently removing the seats to install shelves
or racks to hold tools and supplies, it
is no longer considered an automobile.
It has been permanently altered and it can
no longer be used as a passenger vehicle.
Therefore, this vehicle no longer meets the definition
of an automobile. There are vehicles that are
excluded from the definition of automobiles such as
clearly marked ambulances clearly marked police and fire
vehicles taxis and buses, if used more than
50% to transport passengers and hearses,
if used in a funeral business. 'Clearly marked'
means that, at a distance, someone on the
street would be able to tell without any
doubt that the vehicle is a fire truck,
an ambulance, or a police car. These clearly
marked emergency-response or emergency-medical vehicles must be used
in connection with or in the course of
an individual's office or employment with a fire
department, the police or an ambulance service. On
the other hand,
unmarked vehicles or ghost cars will not be
excluded from the definition of an automobile because
they are not clearly marked on the exterior.
Certain vans, pickup trucks, or similar vehicles can
be excluded from the definition, but you have
to look at the number of passengers they
carry, as well as their percentage of business
use. The higher the seating capacity for passengers,
the higher percentage the Act requires the vehicle
-automobile
to be used for business purposes. If you're
reading material on the CRA website or in
the guides, you might see mention of primarily
or principally or mainly. All of these terms
can be used interchangeably and really mean more
than 50 percent. If you see the phrase
'all or substantially all' this means 90 percent.
Sometimes we use a percentage, other times we
use words to describe this, but they all
have the same meaning. Pick-up trucks can also
be excluded if they are used in a
remote work location or special work site. What
you see on the slide is an excerpt
from the automobile definition. You'll notice that the
percentage of business use has been reduced. Instead
of it being the 90 percent that was
on the previous slide, it's been reduced to
50 percent. If you have an extended cab,
for example, that operates
in a remote work location or a special
work site 50 percent of the time, then
that vehicle is not an automobile. Calculating the
automobile benefits is done in two parts. You
first have to calculate the standby charge and
then the operating expense benefit. Reimbursements by the
employee to the employer will reduce the amount
of the benefit. So before reporting the amount
on the T4 slip,
you must take the reimbursements into consideration. Let's
look at each of these separately. The standby
charge is the benefit the employee enjoys for
having the automobile made available to them. Whether
employees use the automobile doesn't matter. It's simply
that it was available to them. The standby
charge is designed to estimate the depreciation of
the automobile when used for personal driving, which
would be the case
if the employee were to use their own
automobile. You need to use three separate pieces
of information to calculate the standby charge. The
three things you need to calculate the standby
charge are the purchase cost or lease cost
of the automobile the number of days the
automobile was available to the employee and finally,
the number of personal kilometres driven during the
time it was available. Let's look at each
of these separately.
The purchase cost of the automobile is the
total of the following two amounts the cost
of the automobile when you bought it and
the cost of additions made to it before
you purchased it. This would include any upgrades
such as a sunroof, leather seats, or a
rear view camera. It also includes the GST,
HST, and provincial sales taxes where applicable. It
does not include the added addition of any
specialized equipment after
the automobile is purchased. The cost is the
cost when you bought it. The cost has
to be at least the fair market value
and the cost doesn't change. So, if you
bought an automobile in 2013 for $20,000, that's
the amount that you will use every year
to calculate employees' taxable benefits until the vehicle
is no longer used by them. The leasing
cost is the rental cost of the automobile
and any associated costs
such as maintenance contracts excess mileage charges GST
and provincial sales tax as well as HST,
and lump-sum lease payments, including lease payments made
at the beginning of the lease, and any
lump-sum lease payments the company makes at the
beginning of the lease to reduce the monthly
lease cost over the balance of the lease.
These need to be included when calculating the
employee's taxable benefit by dividing all the lump
sum
payments over the term of the lease and
then adding that amount to the monthly lease
costs. Do not include insurance costs for liability
and collision. Now let's talk about availability. It's
different from personal use and it's calculated differently
too. One is when it was available and
the other is the actual driving that has
taken place. The vehicle is available if the
employee has access or control over the
vehicle. And that comes, generally, with the keys.
If an employee with an employer-provided vehicle is
out of town on a business trip or
a vacation for two weeks, and leaves the
vehicle in the driveway and the keys in
the house - although it wasn't driven, the
car during that two-week period was still available
to the employee. Therefore, those two weeks are
included in the number of days available when
the employer calculates the
taxable benefit. Access to the vehicle ends when
the employee returns the keys to the employer.
If you have many employees sharing the same
vehicle, you should have some type of log
in - log out system so there is
a record of when each employee had the
automobile. This information is important for calculating the
benefit. The personal kilometres driven are taken
from the employee records or logbook. Employees should
keep records of the personal kilometres driven. If
they do not, then the employer should assume
20,004 personal kilometers driven per year. There are
three methods to calculate the standby charge the
detailed, the simplified, if four conditions are met,
and the reduced standby charge if three conditions
are met. The data for these
calculations is available on the CRA website and
in our publications. Any reimbursements from the employee
to the employer will reduce the amount of
the standby charge. As you move from the
detailed to the simplified to the reduced, the
amount of the actual calculated benefit will be
less. That's why there are conditions attached to
them. The conditions are contained in the legislation.
The other part for calculating the automobile benefit
is the operating expense benefit. Operating expenses are
what you would normally associate with driving an
automobile gas, oil, maintenance, and repairs. It doesn't
include things like the capital cost allowance, lease
costs, or parking costs. There are two ways
to calculate the operating expense benefit. The employer
can use the fixed rate method which is
a fixed rate of 26
cents a kilometre in 2016 times the number
of personal kilometres. OR - the optional method
if the employee meets all three conditions. It
is calculated by taking the standby charge and
using half of it as the operating expense
benefit. I'm going to caution you though, because
I have found that in the course of
doing different calculations sometimes half the standby charge
ends up being a higher benefit than the
operating expense benefit
if it was calculated using the fixed rate
method. The 26 cents a kilometre is set
by the Department of Finance on an annual
basis. It becomes part of the Regulations in
the Income Tax Act and we refer to
them as being the prescribed rate. So if
you hear that term, that's what it means.
Any reimbursements that the employee makes to the
employer within 45 days from the end of
the calendar year will reduce the amount of
the
operating expense benefit. A reimbursement is any payment
by the employee to the employer for the
personal use of the vehicle. According to the
Act, any payment s by the employee to
the employer for the use of the vehicle
will either reduce the standby charge or the
operating expense benefit, depending on the nature of
the payment, but not both. If the employee
reimburses the employer for all of the calculated
standby
charge and the operating expense benefit, then there
is no taxable benefit for the employee. This
is because the employee has paid for the
cost of the personal kilometres the employee has
driven. If the employee partially reimburses the employer
for the standby charge or the operating expenses,
then the net benefit would have to be
reported on the employee's T4 slip. Any excess
reimbursement can't be transferred. For example,
if the calculated standby charge is $2,000 and
the employee reimburses the employer $2,400 for the
standby charge, the difference of $400 cannot be
used to reduce the operating expense benefit. It's
important for employees to know what amounts can
be reimbursed so they don't overpay. There may
be times where you require your employees to
pay for certain expenses out of their own
pocket. Maybe they
have to pay for their own gas and
oil changes on the employer-provided automobile. If some
of the kilometres driven are personal - and
employees are actually paying for those personal kilometres
out of their pocket because they're paying for
those expenses themselves -the CRA will allow the
employer to take these payments into consideration and
reduce the calculated operating expense benefit accordingly. So,
even though there is technically no reimbursement from
employees
to their employer, which the Act requires, the
CRA recognizes there are situations where employees are
paying for these expenses out of their pocket.
The personal portion is the percentage obtained by
dividing the number of personal kilometres by the
total kilometres driven by employees during the year.
Please take a look at the example on
this slide to see how the payments to
a third party are calculated to arrive at
the amount that will be used to reduce
the operating
expense benefit. Any employee expenses related to the
business kilometres driven on the vehicle would have
to be dealt with outside of the taxable
benefit, whether it is through submission of expense
reports or things of that nature. However, any
business-related payments to third parties, such as gas
stations and oil change places, cannot be used
to reduce the employee's taxable benefit. That's a
separate matter.
We have some great tools to help you
calculate your employees' automobile taxable benefit. There is
an automobile benefit online calculator and an automobile
benefit work sheet RC18 Calculating automobile benefits .
The RC18 is available on our website under
forms and publications. Once you have all of
the information you need, you simply go to
the automobile benefits calculator and plug the numbers
into the appropriate areas.
If you've never calculated an automobile benefit before
and you're doing it for the first time,
it's best to print off the work sheet
RC18. This worksheet really helps put things into
perspective - you're able to see behind the
scenes of the automobile calculator and are able
to make sense of the calculation. It can
also be useful if you have to explain
to an employee why a particular benefit is
higher than what the employee expected. It is
a good idea
to use the worksheet at least once so
you are familiar with the calculations and the
conditions. Some of the information is only available
on the RC18 form. Contrary to popular belief,
there is still a benefit for the personal
use of certain motor vehicles, such as motor
homes, buses, and trucks that do not meet
the definition of an automobile contained in subsection
248 1 of the Act. Just because
a vehicle is not an automobile doesn't mean
that there isn't a benefit. In the world
of automobile and motor vehicle benefits, zero is
not an option whenever there has been personal
driving. No matter how the vehicle is defined,
whether it's an automobile or a motor vehicle,
multiple places of employment, regular place of employment,
what is personal driving, and what isn't apply
to motor vehicles too. As does the need
to keep records. Here is a quick and
simple rule to help you decide which calculation
to use. Calculating the motor vehicle benefit is
not as complicated as calculating the automobile benefit.
Remember with automobiles - you had to calculate
a standby charge and an operating expense benefit.
You don't have to do that to calculate
a motor vehicle benefit. The calculation will simply
be a reasonable estimate of the fair market
value FMV of the personal kilometres driven on
that particular vehicle. You can estimate the FMV
by finding out how much it would cost
to rent a comparable vehicle and adding the
expenses for driving that vehicle for that same
period of time. On this slide you will
see the different options available for calculating the
motor vehicle benefit. These options only apply to
motor vehicles that are not automobiles as you
can
see at number one in each of the
columns. Let's take a look at these options.
Option A is based on the legislation which
is the fair market value of the personal
use of the vehicle. The FMV is a
reasonable estimate of the amount the employee would
have to pay in an arm's length transaction
for the use of a comparable vehicle over
the same period. Option B is administrative. This
option can be used in situations where a
motor vehicle
is essential to the employer's business operation, and
its only personal use is to provide transportation
between an employee's residence and the employer's business
premises. If one of the conditions in Option
B are not met, Option A must be
used to calculate the employee's taxable benefit. We'll
look at the cents per km rates on
the next slide. Option C is also administrative.
The rates in Option C are lower than
Option B. In order for the employer to
use the lower rates to calculate the employee's
taxable benefit, we added more conditions that the
employee must meet. If the employee does not
meet one or more of the conditions, the
taxable benefit can be calculated using Option B
if they meet these conditions or Option A
if no conditions are met. Under Option C,
One - it is important that the employer
restricts the personal use of the vehicle to
travelling between work and home. Two - there
needs to be a document to that effect
in the employee's file, and three - bona
fide business reasons could include security concerns over
the employer's tools and equipment if the vehicle
were left unattended or the employee needs the
vehicle in order to respond to emergencies. The
fourth
condition has two parts the first part -
the vehicle has to be specifically designed for
the job and the second - the employee
needs that vehicle to perform his or her
duties. If the employee is only driving the
vehicle from home to the work location and
rarely uses the vehicle once at work, this
policy does not apply. It is important to
note that the employee would have to show
there has been no other personal use
in Option B or C. For Option B,
the rate per kilometre is 54 cents a
kilometre for the first 5,000 and 48 cents
a kilometre thereafter. These are the rates under
Regulation 7306 of the Act. If there's any
travel in the Northwest Territories, the Yukon, or
Nunavut, 4 cents a kilometre is added on
top of that. For Option C, the
rate in regulation 7305.1 is 26 cents a
kilometre. We've created some calculation comparison for you
using options A, B, and C. Shawn, an
employee, uses a permanently modified company owned van
valued at $20,000 all year long. Based on
the logs, 13,000 of the
32,000 kilometers driven are personal. Let's take a
look together at the different calculations using the
options mentioned at the previous slide. Under Option
A, the fair market value we arrive at
$8,125. The way we calculated that is we
took the $20,000 and multiplied it by the
13,000 kilometers over the total of 32,000 kilometers
driven. In Option B
or Regulation 7306 we arrive at $6,540. The
way we calculated that is 5,000 kilometers at
a rate of 54 cents a kilometer plus
8,000 kilometers driven at the rate of 48
cents a kilometer. Option C under Regulation 7305.1
we arrive at $3,380.
That's 13,000 kilometers at 26 cents per kilometer.
As you can see, there's a difference in
the amount of the benefit depending on whether
you use the legislation fair market value ,
or whether the employee meets the conditions set-out
in Option B or C. Option A is
the most expensive option for the employee. However,
when the conditions are met, the benefit is
reduced. It is the employer's responsibility to determine
the
value of the taxable benefit on the automobile
and motor vehicle and report it on the
employee's T4 slip. The benefit is subject to
CPP contributions and income tax deductions. It's a
non-cash benefit because you're just determining a value.
Non-cash benefits are not insurable, so no EI
premiums are deducted from the value of this
taxable benefit. The employer must remit these deductions
along with the employer's share of CPP
contributions to the CRA by the remittance due
date. Taxable benefits are included in box 14
along with other employment income that employees received
during the year. Employers also need to report
the value of the taxable benefit in the
?Other information' area on the T4 slip. The
code you need to use is code 34.
Our final topic in today's webinar is allowances.
Do you give your employee an allowance to
use their own vehicle for work? If so,
in this section we will talk about the
different types of allowances that an employee can
receive and whether you should include the allowance
in the employee's income. So what is an
allowance? An allowance is money, in addition to
salary and wages that the employee receives from
the employer. A reasonable vehicle allowance does not
have to be included in the employee's income.
Let's take a closer look at reasonable and
unreasonable allowances. Whether any particular allowance is reasonable
is always going to be a question of
fact. It will depend on the circumstances in
which the allowance is paid. For an automobile
or motor vehicle allowance to be reasonable in
the context of the Act, it has to
be paid on a per-kilometre basis. Therefore, it
has to be a reasonable per-kilometre allowance.
This means it can only be paid for
business driving. If any part of the allowance
is used to pay for personal driving or
the employee receives a different type of allowance
for the same use of the vehicle, there
is a taxable benefit for the employee. If
the allowance is reasonable, it's not included in
the employee's income and it does not have
to be shown on the employee's T4 slip.
We use the rates in 7306 of the
Regulations as
a guideline to decide what a reasonable rate
is. So that brings us back to the
54 cents a kilometre we talked about a
couple of slides ago. Records need to be
kept in order to make sure that it
is a reasonable per-kilometre allowance, and that it's
being paid for business use only. Also, records
must be kept because the employer needs to
support the business kilometres driven and the per
kilometre
amount paid. Unreasonable allowances, are amounts that are
too high or too low, and must be
included in the employee's income as a taxable
benefit. For example, if you pay 10 cents
per kilometre and use Regulation 7306's 54 cents
as a guideline, the allowance would definitely be
too low. What is too high or too
low really depends on the circumstances.
If you, as the employer, pay a higher
rate than the rates in 7306, you have
to be able to justify why the higher
rate is reasonable. As long as you're able
to do that, it can be excluded from
the employee's income. Unreasonable allowances, which are added
to the employee's income, may allow the employee
to claim motor vehicle expenses on their personal
income tax return. But the employee would want
to check with the CRA to see what
kind of expenses
can be claimed. Another type of an allowance
that employers may pay their employees is a
flat-rate allowance. This is not reasonable. The employer
can pay a flat rate for any number
of reasons - ease of administration is the
one thing that comes to mind. It could
simply be a matter of $500 a month
or maybe the employer pays $6.50 for every
trip the employee makes within a five-kilometre
radius of the office. Whatever it is, if
it's a flat rate, the allowance is income
to the employee. Flat-rate allowances have to be
included in the employee's income as a taxable
benefit. The employer cannot, at the end of
the year, average the allowance by dividing it
by the number of personal kilometres, to see
if it's reasonable. The employer may also provide
a combination
of the two allowances. For example, the employee
can be paid a flat rate allowance and
a reasonable per-kilometre rate. If for example the
employer pays a flat rate to offset fixed
expenses and a reasonable per-kilometre for each kilometre
driven to offset the operating expense benefit, both
have to be included on the employee's T4
slip as a taxable benefit, because both allowances
are for the same use of the vehicle.
However, it can be treated differently where the
allowances can be separated and looked at apart
and the reasonable per-kilometre and flat rates are
paid for different uses. A good example of
this is a situation where the employer pays
a reasonable per-kilometre rate for the employee's travel
outside the city and a flat rate for
the employee to travel inside the city. The
employer can separate those two allowances, and only
include the
flat rate in the employee's income as a
taxable benefit. The employer is responsible to determine
if the allowance is taxable, which part of
it is taxable and to include it in
the employee's income at the end of the
year. The employer must deduct CPP, EI, and
income tax from the allowances as they are
paid throughout the year. Because they're paid in
cash, allowances are insurable. That's why you see
the EI as one of the deductions on
this slide.
The employer must remit these deductions to the
CRA by the remittance due date. The taxable
allowances are included in box 14 along with
the employee's other employment income, and code 40
is used in the other information area of
the employee's T4 slip instead of code 34.
If you are looking to expand your knowledge
on any of the items covered in today's
webinar, there are resources
available to help you on the CRA website.
Go to www.cra.gc.ca and visit our web pages
for businesses. You can search automobile and motor
vehicle benefits and keeping records to quickly find
out information about today's webinar. You can also
find the following publications on our website RC18,
Calculating Automobile Benefits. T4130,
Employers' Guide - Taxable Benefits and Allowances. IT63R5
- Benefits, Including Standby Charge for an Automobile,
from the Personal Use of a Motor Vehicle
Supplied by an Employer - After 1992 and
IT522R - Vehicle, Travel and Sales Expenses of
Employees. Also, don't forget to use the automobile
benefits online calculator available on the CRA's
website. Thank you, again, for joining me today.
I hope that this webinar has provided you
with a better understanding of automobile and motor
vehicle benefits and allowances.