Did you know that 90% of employers who opt out of professional payroll services and attempt to do it themselves in-house, do it incorrectly? This is due to a lack of understanding the difference between taxable and non-taxable benefits. To help offset that large percentage, we’re going to outline the differences between the two and stress the importance of hiring someone who has the knowledge and understanding of completing payroll correctly.

Taxable Benefits—

A taxable benefit is any benefit an employee receives that has monetary value and is deemed a “positive benefit”. This benefit must be reported when the employee files their personal income taxes.

Professional payroll services are equipped with a well-verse knowledge of these benefits, which comes into play when calculating the appropriate payroll deductions and filing payroll information returns.

Common taxable benefits include:

• Tips
• Life insurance premiums
• Boarding, lodging and low-rent or rent-free housing
• Travel expenses for personal travel
• Flat fee reimbursement for mileage
• Personal use of a company car
• Gifts over $500 per year
• Gift cards of any denomination
• Cash gifts/bonus
• Use of a company-owned vacation property
• Prizes and awards
• Costs of employer-paid courses for personal interest not related to work
• Personal use of company airmiles
• Parking
• Cell phone and internet *** can be taxable dependent upon use
• Gym memberships if all employees are not privy to use
   

Non-Taxable Benefits

A non-taxable benefit is a benefit that an employee receives that is deemed not to have monetary value. These benefits do not need to be reported when the employee files their personal income tax.

Common non-taxable benefits include:

• Subsidized meals in an onsite cafeteria
• Meals or allowance provided for working overtime (unless it’s a regular occurrence)
• Fees from personal use of the internet or a cell phone (as long as it doesn’t exceed what’s included in a basic, fixed-cost plan) ***dependent upon usage     
• Group benefit premiums
   

Home Office Expenses

A recent change made by the Government of Canada due to Covid-19 is the allowances provided by an employer to purchase home office equipment.

Normally, a reimbursement from an employer to an employee for the purchase of home office equipment would be a taxable benefit. However, the Government of Canada recognizes that many employees across the country may not have the appropriate equipment for a home office during the pandemic. Therefore, an amount of up to $500 for home office equipment at this time will be considered a non-taxable benefit.

Hiring a Professional

Businesses can greatly benefit when leaning on professional payroll services. Not only are these professionals up-to-date with the governments everchanging taxable and non-taxable benefit rules, but they can also assist in putting more money in both the company and employee’s pockets.

Let’s be honest, payroll is not everybody’s cup of tea.

Contact Us

For any questions you may have, please feel free to contact us by phone at (306) 530-9548 or by using our online contact form below.