Combination of flat-rate and reasonable per-kilometre allowances
If you pay your employee an allowance that is a combination of flat-rate and reasonable per-kilometre allowances that cover the same use for the vehicle, the total combined allowance is a taxable benefit and has to be included in the employee's income.
Employees may be able to claim allowable employment expenses on their return.
Do not include the GST/HST in the value of the allowance.
If the allowance is taxable, it is also pensionable and insurable. Deduct CPP contributions, EI premiums, and income tax.
Reporting the benefit
Report the taxable allowance in box 14 "Employment income" and in the "Other information" area under code 40 at the bottom of the employee's T4 slip. For more information, see T4 - Information for employers.
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