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Employer-provided benefits and allowances: COVID-19

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In light of the COVID-19 pandemic, the Canada Revenue Agency (CRA) recognizes that for many employers and employees, there have been changes in the way that work is being conducted so employees are not unduly exposed to the COVID-19 virus while performing their duties.

Under these extraordinary circumstances, the CRA has adopted the following positions for employer-provided benefits pertaining to commuting and parking costs, as well as computer and home office equipment. These positions are effective from March 15, 2020 to December 31, 2020.

If you are unsure whether you are providing a benefit to an employee, see Do you give your employee a benefit, an allowance, or an expense reimbursement?

For more information on employer-provided benefits and allowances, see Guide T4130, Employers’ Guide – Taxable Benefits and Allowances.

Commuting costs

The CRA acknowledges that employees who are required to commute to their regular places of employment to perform employment duties may incur additional commuting costs to minimize their risk of exposure during the COVID-19 pandemic. Employees may also incur costs to commute to their regular place of employment to pick up equipment that enables them to perform employment duties from home. In recognition of these challenges, the CRA is applying the following tax treatment in these situations:

If an employee continues to perform their employment duties at their regular place of employment:

When an employer pays for, reimburses, or provides a reasonable allowance for additional commuting costs incurred by an employee during the COVID-19 pandemic, the CRA will not consider the amounts to be taxable, provided these costs are over and above the employee’s normal commuting costs.

  • This position is extended to the use of employer-provided motor vehicles for commuting if the employee did not normally commute to work using an employer-provided motor vehicle before the COVID-19 pandemic.

If an employee is performing their employment duties at home because their regular place of employment is closed:

When an employer pays for, reimburses, or provides a reasonable allowance for commuting costs incurred by an employee to travel to their regular place of employment for any purpose that enables them to perform their duties from home (for example, to retrieve necessary equipment or supplies), the CRA will not consider the amounts to be taxable.

  • This position is extended to the use of employer-provided motor vehicles for such travel.

In both situations, employers are expected to maintain appropriate records to demonstrate that any allowances provided are reasonable in relation to the commuting costs incurred by the employee. Employees are expected to maintain appropriate records to account for their use of employer-provided motor vehicles, including the total kilometres driven when commuting between home and their regular place of employment.

Employer-provided parking

When a regular place of employment is closed due to COVID-19, including situations where employees have been sent home by the employer, employer-provided parking at the regular place of employment will not be considered a taxable benefit by the CRA.

However, once an employee returns to their regular place of employment to perform their duties, the CRA will consider the employer-provided parking spot available for an employee’s use and the employer-provided parking would be a taxable benefit.

Computer and home office equipment

The CRA recognizes that the COVID-19 pandemic has resulted in many employees having to work from home, where they may not have the necessary computer or home office equipment (desk, office chair, etc.) to perform their employment duties.

In this particular context, the CRA will not consider an employee to receive a taxable benefit where their employer pays for or reimburses up to $500 of computer or home office equipment to enable the employee to carry out their employment duties, provided the employee submits receipts to the employer.

If an employer pays for or reimburses more than $500 of computer or home office equipment, the amount over $500 must be included in the employee's income.

  • Example: Michael’s employer pays for a desk valued at $750 that Michael will keep after the pandemic. As the desk is $250 more than the $500 amount, Michael is receiving a taxable benefit of $250 that must be included in his income ($750 – $500).

This position is extended to accountable advances provided to an employee, but does not apply to allowances provided for this purpose. An accountable advance is an amount an employer gives to an employee who has to account for their expenses by producing receipts and returning any amount they did not spend. If an employer provides an employee with an allowance for computer or home office equipment, even if the allowance is $500 or less, the full amount of the allowance must be included in their employment income as a taxable benefit.

Meal costs

Where an employer pays for, reimburses, or provides a reasonable allowance for meals to employees working at their regular place of employment during regular hours of work, the amount must be included in their employment income as a taxable benefit. However, the CRA’s existing policies maintain that there are certain circumstances where an employer can provide an overtime meal or allowance, or a subsidized meal, without the employee receiving a taxable benefit.

Cell phone and/or internet service plans

The CRA’s existing policies maintain that an employer may pay for or reimburse the cost of an employee's cell phone service plan, or Internet service at home to help carry out their employment duties. The portion used for employment purposes is not a taxable benefit. For more information, go to Cellular phone and Internet services.

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