Disability-related employment benefits

Disability-related employment benefits

Content has been updated for clarity, completeness and plain language.

No changes were made to the current Canada Revenue Agency (CRA) administrative policy.

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Determine if a benefit is taxable

Situation: Benefits or allowances you provide to your employee for transportation costs

If you provide a benefit or an allowance for transportation costs to an employee who has a severe and prolonged mobility impairment (eligible for the disability tax credit (DTC)) or is blind, the benefit or allowance is not taxable when it is for reasonable transportation costs between an employee's home and work location (including parking near that location).

These transportation costs can include an allowance for taxis or specially designed public transit and parking that you provide or subsidize for these employees.

Individuals eligible for the DTC

Individuals eligible for the DTC include individuals that have a severe and prolonged impairment in:

  • vision
  • walking
  • mental functions necessary for everyday life
  • hearing
Examples
  • An employee has a severe and prolonged mobility impairment and their DTC claim was approved. The employer provides parking for all of its employees near the work location. While other employees may have a taxable benefit, the parking space required by this employee is not a taxable benefit.
  • An employee is considered blind. The employer subsidizes their expense for taking a taxi between their home and workplace. The value of the subsidized taxi is not a taxable benefit.
  • An employee is hearing-impaired and their DTC claim was approved. During the monthly staff meeting, their employer pays for an attendant to take notes or for sign language interpretation for them so that they do not miss any of the points being raised. The cost of the attendant is not a taxable benefit to the employee.

Proof of eligibility for the DTC

The amount entered on line 6, disability amount of Form TD1, Personal Tax Credits Return is considered proof from the employee for the DTC eligibility. You may recommend to your employee to complete a new TD1 Form if their situation has changed. When CRA makes a decision for the DTC eligibility, a notice of determination or proof of eligibility is sent to the taxpayer. You can ask your employee for a copy of the DTC approval as proof but your employee is not required to provide it.

Learn more: Disability tax credit (DTC)

Situation: Benefits or allowances you provide to your employee for attendant services

If you provide a benefit or allowance for attendant services to an employee with a severe and prolonged mental or physical impairment, the benefit or allowance is not taxable when it is for reasonable costs for attendants to help these employees perform their duties of employment.

Attendants services costs can include readers for persons who are blind, signers for persons who are deaf, and coaches for persons who are intellectually impaired.

Calculate the value of the benefit

If the benefit is taxable, the value of the benefit is equal to the fair market value (FMV) of the benefit provided.

Withhold payroll deductions and remit GST/HST

If the benefit is taxable, you must withhold the following deductions. The amounts must be included in the pay period they were received or enjoyed.

The withholding and remitting requirement depends on the type of remuneration: cash , non-cash , or near-cash .

  • Non-cash and near-cash: Option 1

    Withhold:

    • Income tax
    • CPP
    • EI (do not withhold)

    Remit:

    • GST/HST
  • Cash: Option 2

    Withhold:

    • Income tax
    • CPP
    • EI

    Remit:

    • GST/HST – Reimbursements
    • GST/HST – Allowances (do not remit)

Report the benefit on a slip

If the benefit is taxable, you must report the following on the T4 slip.

  • Non-cash and near-cash: Option 1

    Report on:

    • Box 14 – Employment Income
    • Box 26 – CPP/QPP pensionable earnings
    • Code 40 – Other Information
  • Cash: Option 2

    Report on:

    • Box 14 – Employment Income
    • Box 24 – EI insurable earnings
    • Box 26 – CPP/QPP pensionable earnings
    • Code 40 – Other Information

References

Related

Legislation

ITA: Section 6
Amounts to be included as income from office or employment
ITA: 6(1)(a)
Value of any benefit is to be included as income from office or employment
ITA: 6(1)(b)
Allowance for any purpose
ITA: 6(16)
Disability-related employment benefits – reasonable amounts not included in income
ITA: 118.2(2)(a)
Eligible medical expenses
ITA: 118.3
Credit for mental or physical impairment
ITA: 118.3(1)(c)
Credit for mental or physical impairment
CPP: 12(1)
Amount of contributory salary and wages
ETA: 173
Taxable benefit is considered a supply for GST/HST purposes
IECPR: 2(1)
Amount of insurable earnings
IECPR: 2(3)
Earnings from insurable employment
IECPR: 2(3)(a.1)
Earnings from insurable employment - amount excluded as income under 6(1)(a) or (b), 6(6) or (16) of the ITA

 

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