Uniforms and protective clothing
Uniforms, protective clothing, safety and special clothing
Content has been updated for clarity, completeness and plain language. No changes were made to the current Canada Revenue Agency (CRA) administrative policy.
On this page
- Determine if the benefit is taxable
- Calculate the value of the benefit
- Withhold payroll deductions and remit GST/HST
- Report the benefit on a slip
- References
Determine if the benefit is taxable
Generally, if you provide a benefit such as special clothing, an allowance or a reimbursement for special clothing to your employee, the benefit is taxable. Depending on your situation, the benefit may not be taxable under the CRA's administrative policy .
Non-taxable situation
Under the CRA's administrative policy, the benefit is not taxable if one of the following applies:
- You provide your employee with a distinctive uniform they have to wear when carrying out their employment duties (regular clothing your employee can wear outside of business hours for personal purposes is not considered a distinctive uniform)
- You provide your employee with protective clothing (including safety footwear and safety glasses) designed to protect them from hazards associated with the employment
You provide an allowance to your employee for the cost of protective clothing and all of the following apply:
- Your employee used the allowance to purchase protective clothing
- Your employee is required by law to wear the protective clothing on the work site
- You can justify your position regarding the amount of the allowance being reasonable
You reimburse or provide an accountable advance to your employee for the cost of a distinctive uniform or protective clothing and all of the following apply:
- You require and received a copy of the actual receipt from your employee to confirm the amount paid
- Your employee is required by law to wear the protective clothing on the work site
- You can justify your position regarding the amount of the reimbursement or accountable advance being reasonable
- You pay for laundry or dry cleaning services or provide a reasonable allowance to your employee for these services to clean a distinctive uniform or protective clothing
- You reimburse your employee for services related to laundry or dry cleaning to clean a distinctive uniform or protective clothing and you received a copy of the receipts from your employee to confirm the amount paid
What is considered a distinctive uniform or protective clothing under the CRA's administrative policy
Under the CRA's administrative policy, the benefit provided to your employee relates to a distinctive uniform or protective clothing if the following apply:
Distinctive uniform
Your employee must wear while carrying out the employment duties
Regular clothing your employee can wear outside of business hours for personal purposes is not considered a distinctive uniform. This is considered a personal expense and the benefit is taxable.
Protective clothing (including safety footwear and safety glasses)
It is designed to protect your employee from hazards associated with their employment
Taxable situation
If the benefit does not meet one of the conditions above, the benefit is taxable.
Calculate the value of the benefit
If the benefit is taxable, the value of the benefit is equal to:
- Fair market value of the benefit received or enjoyed
- minus Any amounts your employee reimbursed you
- equals Value of the benefit to be included on the T4 slip
The amounts must be included in the pay period they were received or enjoyed.
Withhold payroll deductions and remit GST/HST
The withholding and remitting requirement depends on the type of remuneration: cash , non-cash , or near-cash .
You must withhold the following deductions:
Non-cash and near-cash: Option 1
Withhold:
- Income tax
- CPP
- EI (do not withhold)
Remit:
- GST/HST in certain situations
Cash: Option 2
Withhold:
- Income tax
- CPP
- EI
Do not remit:
- GST/HST
The amounts must be included in the pay period they were received or enjoyed.
Learn how to calculate deductions and the GST/HST to remit on benefits: How to calculate – Calculate payroll deductions and contributions.
Report the benefit on a slip
If the benefit is taxable, you must report the following amounts on the T4 slip.
Non-cash and near-cash: Option 1
Report on:
- Box 14 – Employment Income
- Box 26 – CPP/QPP pensionable earnings
- Code 40 – Other Information
Cash: Option 2
Report on:
- Box 14 – Employment Income
- Box 24 – EI insurable earnings
- Box 26 – CPP/QPP pensionable earnings
- Code 40 – Other Information
Learn how to report the benefit on a slip: Fill out the slips and summaries – File information returns (slips and summaries).
References
Legislation
- ITA: 6
- Amounts to be included as income from office or employment
- ITA: 6(1)(a)
- Value of any benefit is to be included as income from office or employment
- ITA: 6(1)(b)
- Allowance for any purpose
- CPP: 12(1)
- Amount of contributory salary and wages
- ETA: 173
- Taxable benefit is considered a supply for GST/HST purposes
- IECPR: 2(1)
- Amount of insurable earnings
- IECPR: 2(3)
- Earnings from insurable employment
- IECPR: 2(3)(a.1)
- Earnings from insurable employment – amount excluded as income under 6(1)(a) or (b), 6(6) or (16) of the ITA
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