Airline passes for employees and retirees of an airline company
If you provide standby airline passes to a current airline employee for their personal travel, there is no taxable benefit for the employee.
If you provide space-confirmed airline passes to an employee for personal travel, the passes are a taxable benefit. The value of the benefit to be included in the employee’s income is the fair market value of the pass (including any fees and taxes), less any amount paid by the employee.
If you provide standby or space-confirmed airline passes to a retired airline employee for their personal travel there is no taxable benefit for the retired employee.
If you pay for or provide your employee with public transit passes, it is usually a taxable benefit for the employee. Public transit includes transit by local bus, streetcar, subway, commuter train or bus, and local ferry.
As of July 1, 2017, the public transit tax credit ended. The 2017 federal budget provision for this change received royal assent on June 22, 2017 (Bill C-44). If your employee paid for some of the cost of buying public transit passes for the period of January 1, 2017 to June 30, 2017 (for example, through payroll deductions), he or she may be able to claim the public transit tax credit when filing his or her income tax and benefit return.
Report the taxable benefit on the employee’s T4 slip in box 14, “Employment income,” and in the “Other information” area under code 40 at the bottom of the slip.
Report the total of the taxable benefit (code 40) and the amount the employee paid to buy the transit pass (payroll deductions) in the “Other information” area under code 84 at the bottom of the employee’s T4 slip.
Transit passes - employees of a transit company
If your company is in the business of operating a bus, streetcar, subway, commuter train or bus, or ferry service, and you provide free transit passes to your employees or their families, special rules apply.
If you provide free or discounted passes to a current or retired employee of one of the businesses mentioned above, and the passes are only for the employee's or the retiree’s use, there is no taxable benefit for the employee or the retiree.
To qualify as a non-taxable benefit under this special rule, ferry passes are limited to passenger (walk on) fares only.
If you provide free or discounted passes to a member of your employee's or retired employee's family, the fair market value (FMV) of the pass is a taxable benefit for the employee. Report the retiree's benefit using code 028, “Other income” in the "Other information" area at the bottom of the T4A slip.
If you provide free or discounted passes to a current employee in an area other than the transportation business or its operations, their FMV is a taxable benefit for the employee. For example, if a city owns a transit company, the FMV of a pass given to a current employee in the city's accounting department would be a taxable benefit, while a pass given to a current employee in the accounting department of the transit business operations would not be a taxable benefit.
For examples of situations where transit passes are considered taxable benefits, go to Examples – Employees of transit companies.
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.
Report the total of the taxable benefit (code 40) and the amount the employee paid to buy the transit pass (payroll deductions) in the "Other information" area under code 84 at the bottom of the employee's T4 slip. For more information, see T4 – Information for employers.
Forms and publications
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