Examples – Employees of transit companies

Example 1

Non-taxable benefit

Pierre works as a bus driver for the Toronto Transit Company and his employer provides him with a free transit pass for his exclusive use.

In this situation, the pass is not a taxable benefit, since it is for Pierre's exclusive use and his duties are directly related to the business of transit.

Example 2

Taxable benefit

Joe works as the operator of the local ferry during the summer and he receives 15 free common ferry passes (that can be used by anyone), worth $10 each. Joe doesn't need them for himself and he gives them all to his daughter.

In this situation, the passes are a taxable benefit, since they were not for Joe's exclusive, personal use. This would still be the case, whether or not Joe uses the passes himself, or gives them to his daughter. The taxable benefit to be included in Joe's income is $150 ($10 × 15 passes).

Example 3

Taxable benefit

Loretta works as a secretary in the mayor's office in Vancouver, and her employer provides her with a free transit pass every month for the city bus service. The passes would normally cost Loretta $100 per month.

In this situation, the free passes are a taxable benefit. Loretta works in a function separate from the transportation operations of the city. The taxable benefit to be included in Loretta's income is $100 per month, or $1,200 per year.

Example 4

Taxable benefit

Albert is a mechanic for the transit authority in Halifax. He and his family are given a discounted rate on the purchase of transit passes. A pass normally costs $100 per month. Albert buys 4 passes every month (one for himself, and passes for his wife and 2 children), paying $40 per month for each pass.

Albert's discounted pass is not a taxable benefit, because he is an employee of the transit company. However, the difference between the fair market value (FMV) of the passes for his family ($100 each) and the amount Albert actually pays ($40 each) is a taxable benefit. The taxable benefit to be included in Albert's income is $180 per month ($60 difference between the amount Albert paid and the FMV of the pass for each of his 3 family members), or $2,160 per year.

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