Taxable Benefits

Employers often give their employees additional compensation and perks beyond their normal salaries. This can be an important aspect of employee morale. However, it is imperative that employers understands that these are taxable benefits. As with all employee compensation, the CRA has rules for these that you must follow. In previous blog posts we have discussed mileage reimbursement, and employee gifts and awards. This post will explain a few taxable benefits and give you the resources to navigate the maze of CRA payroll obligations.


Parking can be considered a taxable benefit even if you as the employer own the lot. Now before you start to worry that you are missing parking on your employees pay cheques, there are situations in which it is not a taxable benefit to provide parking. These include: 

  • If your employee has a disability
  • It is a lot that provides both public and employee parking, For example, working at a mall.
  • You need to provide parking for an employee who uses their car for business purposes during the day. 
  • The parking situation is considered scramble parking, which means that there are less parking spots than employees. 

An example where parking would be a taxable benefit is providing your employee parking in downtown Edmonton and they don’t need their car for business. You would then need to include this in the employees income. 

Company Vehicle

If you provide your employee with a company vehicle to use, you need to pay close attention to how they are using it. The employee needs to be using the vehicle for business purposes only, and return it to the company at the end of the day. If you do allow the vehicle to go home with your employee, it must be for valid business reasons and no personal driving takes place. Your employee must also keep a logbook to prove that all KMs driven were for business reasons. Note: Driving the vehicle to and from work does not count as business driving. When the vehicle is readily available to the employee, and they use it for their personal driving this becomes a taxable benefit. 

The CRA has provided a calculator that can help you determine how much you need to charge your employee for a taxable benefit. As most of the situations will have a combination of both business and personal driving. You can find the calculator here.

 Cell Phone

Cell phones are now vital to running a business. Unfortunately, cell phones are part of the long list of items that can be considered taxable benefits. Luckily, there are provisions that allow you to pay for a cellphone for an employee. The first of which is if the company owns the cellphone and it is used by the employee for business purposes. 

 If it is the employees personal phone, you can reimburse them for the plan only if the following conditions are met: 

  • The plan is reasonable & has a fixed cost
  • Your employee does not incur overages from personal use

If you pay for personal overages or for a premium plan, when the phone is under the employee name, this is a taxable benefit to the employee. 

Another situation that is considered a taxable benefit is, if you reimburse your employees for buying a personal phone. Even if the phone was damaged during the course of doing something business related. It is also taxable to the employee if you give them a fixed allowance for a cell phone


Of course there are many other taxable benefits, you can find the entire guide on the CRA website here. Included in this is a taxable benefit chart that you can reference. It gives you both the payroll taxes on the benefit and which box it needs to go in on the T4.

On-Core can help you with any questions you may have regarding taxable benefits!