Employment Income Flashcards
Allowance paid by the ER to the EE, without a requirement for EE to substantiate the amount spent (ie. no receipts required)
Taxable or Non Taxable Benefit?
Generally - this is a taxable benefit.
Few Exceptions
- Motor Vehicle
- Travelling Expenses
EE has motor vehicle used in travelling to perform employment duties. They are provided allowance without required to keep a record of km traveled for business.
Taxable or Non Taxable Benefit?
This is a taxable benefit.
The employee is required to keep a log of employment kilometres to substantiate employment kilometres travelled
EE has motor vehicle used in travelling to perform employment duties. They are provided allowance and reimbursement for motor vehicle expenses
Taxable or Non Taxable Benefit?
This is taxable benefit
EE has motor vehicle used in travelling to perform employment duties. They keep a log of km travelled, and received allowance based on km travelled at $0.78 per km.
Taxable or Non Taxable Benefit?
This is a taxable benefit - on the amount over the CRA limit.
CRA limit:
$0.58 per km - first 5000 km
$0.52 per km - > 5000km
What is the CRA limit for Motor Vehicle Allowance? ($ per km)
$0.58 per km for first 5000 km
$0.52 per km for >5000 km
When an EE is given an allowance for Travelling - when is it a taxable benefit and when is it not a taxable benefit?
When the amount is unreasonably high or low, it should be a taxable benefit, but expenses can be deducted.
When the allowance amount is reasonable for the expenses incurred, it’s not considered a taxable benefit.
How do you account for Fees paid to sit on the Board?
Taxable or Non Taxable Benefit?
ITA 6(1)(c) requires that fees received for sitting on a Board of Directors be included in employment income, as a board member is considered to hold an “office.”
Is Counselling service payment by the ER considered taxable benefit?
Yes and no.
Yes when the counselling service is related to financial or income tax return prep.
If the counselling service is related to physical / mental health, re-employment (job replacement), retirement - then it’s not considered as a taxable benefit.
Are discounts on merchandise offered by ER a taxable benefit for the EE?
Yes and no.
If the discount is less than FV of merchandise AND the EE received the discount because of their employment, then the price difference between FV and purchase price is a taxable benefit.
If the discount is less than FV of merchandise, but the offer is available to the general public, then it’s not a taxable benefit.
Under what scenario are the frequent flyer points from employment a taxable benefit?
If either of the scenarios apply:
a) points are earned on company credit card
b) EE is allowed to use personal CC to pay for expense other EE in order to earn personal points
Under what scenario are the frequent flyer points from employment not a taxable benefit?
If ALL of the scenarios apply:
a) points are not converted to cash
AND
b) the plan is not an alternate form of compensation
AND
c) the plan is not for tax-avoidance purposes
When is Gift & Award taxable?
- > $500 of non cash
- cash or near cash (any $)
- given to award performance
When is Gift & Award not taxable?
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