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 a current airline 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.
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.
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 a 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.
Examples – Employees of transit companies
You are a bus driver for the Toronto Transit Co. and your employer provides you with a free transit pass that only you can use.
In this situation, the pass is not a taxable benefit because it is for your use only and your duties are directly related to the business of transit.
You works as the operator of the local ferry during the summer and receive 15 free common ferry passes that can be used by anyone, worth $10 each. You do not need them for yourself, so you give them all to your daughter.
In this situation, the passes are a taxable benefit, since they were not for your exclusive use. This would still be the case whether you use the passes yourself or give them to your daughter. The taxable benefit to be included in your income is $150 ($10 × 15 passes).
You work as a secretary in the mayor's office in Gatineau and your employer provides you with a free transit pass every month for the city bus service. The passes would normally cost you $100 per month.
In this situation, the free passes are a taxable benefit because your duties are not related to the business of transit. The taxable benefit to be included in your income is $100 per month, or $1,200 per year.
You are a mechanic for the transit authority in Halifax. You and your family are given a discounted rate on the purchase of transit passes. A pass normally costs $100 per month. You buy 4 passes every month (one for yourself, one for your wife and one for each of your 2 children), paying $40 per month for each pass.
Your discounted pass is not a taxable benefit because your are an employee of the transit company. However, the difference between the fair market value (FMV) of the passes for your family ($100 each) and the amount you actually pay ($40 each) is a taxable benefit. The taxable benefit to be included in your income is $180 per month ($60 difference between the amount you paid and the FMV of the pass for each of your 3 family members), or $2,160 per year.
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.
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