Medical travel assistance paid in a prescribed zone
Medical travel includes any trip your employee or members of their household take to get medical services that are not available in the area where they live. Medical travel benefits are considered to be the cost of transportation from the place in a prescribed zone to the place where medical treatment is available. This includes the transportation cost of an attendant if the patient needs one while travelling.
You have to identify the portion of the travel assistance that refers to the medical travel benefits you provide to your employee.
For a T4 slip, enter the entire Travel assistance benefits paid in a prescribed zone under code 32 in the "Other information" area. Enter the medical part under code 33. For more information, see T4 slip.
For a T4A slip, enter the entire travel assistance benefit under code 028 "Other income," in the "Other information" area at the bottom of the slip. Enter the medical part under code 116 "Medical travel assistance." For more information, see T4A slip.
If you do not identify which part of the benefit was for medical travel, the CRA will consider all travel assistance as vacation (or other) travel and the employee will not be entitled to claim a deduction for medical travel. As well, the CRA will limit the deduction for the employee and the members of the household to two trips each.
Amounts you pay or reimburse your employee for medical travel or any associated cost under the terms of a private health services plan are not taxable benefits. Payments you make due to an obligation you have under a collective agreement may be considered a private health services plan. If this is the case, you should not report them on the employee's T4 slip.
When travel assistance benefits are in the form of non-refundable tickets or travel vouchers, you have to make payroll deductions when the benefit becomes taxable, i.e. when the employee or member of their household takes the trip. However, when you give travel assistance in the form of cash, we consider it to be a cash advance, and you have to make the payroll deductions when the advance is paid to the employee.
You may waive the requirement to deduct income tax from the full travel assistance payment you give to your employee who lives in a prescribed northern zone or from 50% of the payment received by an employee who lives in a prescribed intermediate zone. To do this, the employee has to agree, in writing, to use the payment entirely for vacation or medical travel when they receive it. If the employee does not agree, you have to deduct income tax.
Whether or not you have to make income tax deductions, you have to deduct CPP contributions and EI premiums on cash payments. You have to deduct CPP contributions on non-cash benefits if the employee also receives cash remuneration from you during the year. If the non-cash benefit is the only form of remuneration you provide to your employee in the year you do not have to make payroll deductions.
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