Cellular phone and Internet services

If you provide your employee with a cellular phone (or other handheld communication device) or Internet service at home to help carry out his or her duties, the business use is not a taxable benefit.

If part of the use of the phone or Internet service is personal, you have to include the value of the personal use in your employee's income as a taxable benefit. The value of the benefit is based on the fair market value (FMV) of the service, minus any amounts your employee reimburses you. You can only use your cost to calculate the value of the benefit if it reflects the FMV.

For cellular phone service only, we do not consider your employee's personal use of the cellular phone service to be a taxable benefit if all of the following apply:

  • The plan's cost is reasonable
  • The plan is a basic plan with a fixed cost
  • Your employee's personal use of the service does not result in charges that are more than the basic plan cost

You, as the employer, are responsible for determining the percentage of business use and the FMV. You have to be prepared to justify your position if we ask you to do so.


If you give your employee an allowance for cellular phone or Internet services, the allowance must be included in the employee’s income.

Include any GST/HST that applies in the value of this benefit.

Payroll deductions

If the benefit is taxable, it is also pensionable. Deduct income tax and CPP contributions. If the taxable benefit is paid in cash, it is insurable. Deduct EI premiums. If it is a non cash benefit, it is not insurable. Do not deduct EI premiums.

Reporting the benefit

Report the taxable benefit in box 14 "Employment income" and in the "Other information" area under code 40 at the bottom of the T4 slip. For more information, see T4 – Information for employers.

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