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.

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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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