Taxation - Employment income

Question 1

Employment benefit – Counselling

Answer 1

Taxable
* Financial Counselling (except job replacement and retirement)
* Income tax preparation

Nontaxable benefit
* Mental and physical health counselling
* Financial counselling for job replacement and retirement

Question 2

Employment benefit – Discounts

Answer 2

Taxable
* Difference between fair market value of merchandise and price paid by employee(lower)

Non Taxable
* Discounts also given to general public

Question 3

Employment benefit – Frequent Flyer Points

Answer 3

Taxable
* Points earned on company credit card
* Employee permitted to use personal credit card to pay for expenses of other employees to earn personal points

Non Taxable
* Points are not converted to cash
* Plan is not an alternative form of compensation
* Plan not for tax avoidance purposes

Question 4

Employment benefit – Gifts and Awards

Answer 4

Taxable
* Non cash in excess of $500
* Cash or near cash (gift certificates)
* Given for performance
* Given to non-arm’s length employees

Non Taxable
* Non cash up to $500
* Immaterial e.g. coffee, mugs, Tees

Question 5

Employment benefit – Gifts and Awards (Length of Service Awards)

Answer 5

Non Taxable
* Given for at least 5 years of service ( and after that in increments of five years)
* Non cash up to $500
* Paid to an arm’s length employee

Question 6

Employment Benefit - Health care

Answer 6

Taxable
* Premiums paid for a public health care plan (not mandated to be paid by employer)

Non Taxable
* Premiums paid for a private health care plan

Question 7

Employment benefit – Insurance Plans Life insurance

Answer 7

Taxable
* Premiums paid for life insurance on employee’s life if beneficiary is the employee

Non Taxable
* If the employer is the beneficiary

Question 8

Employment Benefit-Meals

Answer 8

Taxable
* Subsidized meals offered to employee at less than the cost. Benefit is difference between cost of mean and payment made by the employee

Question 9

Employment benefit- Pension Plans

Answer 9

Non Taxable
* Employer contributions to Registered Pension Plans (RPP), Deferred Profit Sharing Plans and Canada Pension Plan

Question 10

Employment benefit- Recreational facilities and Club dues

Answer 10

Taxable
* Use of employer provided recreational facilities and club dues incurred for the benefit of the employee are taxable

Non Taxable
* Incurred primarily for the benefit of the employer

Question 11

Employment benefit- Reimbursements

Answer 11

Taxable
* If reimbursement is for personal expenses

Non Taxable
* If reimbursement is for employment related expenses

Question 12

Employment benefit – Relocation payments

Answer 12

Taxable
* Moving allowance given to employee for relocation; however, employee can deduct eligible moving expenses

Non Taxable
* If employer reimburses employee for moving expenses. Employee can’t deduct moving expenses

Question 13

Employment Benefit – Relocation payments; Reimbursements for housing costs

Answer 13

Taxable
* One half of reimbursement in excess of 15,000

Question 14

Employment Benefit - School services

Answer 14

Non taxable
* Fees related to subsidized school services provided in remote locations and transportation to the job in a remote location where public and private vehicles are not welcome or practical.

Question 15

Employment Benefit – Severance pay

Answer 15

Severance payments are taxable

Question 16

Employment Benefit – Signing Bonus

Answer 16

Signing Bonuses are taxable

Question 17

Employment benefit – Tools

Answer 17

Taxable
* If cost of tools is reimbursed and if employee owns the tools after reimbursement

Non Taxable
* In employer owns the tools after reimbursement

Question 18

Employment Benefit – Transportation passes

Answer 18

Taxable
* Airline transportation to airline employees for personal use on a space confirmed basis

Non Taxable
* Transportation passes for bus, air and rail employees (standby flying only)

Question 19

Employment Benefit – Tuition fees

Answer 19

Taxable
* Tuition fees paid or reimbursed for benefit of the employee

Non Taxable
* For benefit of the employer

Question 20

Employment benefit – Uniforms

Answer 20

Non Taxable
* Distinctive uniforms and special clothing supplied by employer to be worn by employee while carrying out their employment duties

Question 21

Employment benefit- Group Insurance Plans Sickness/ Accident claims and premiums

Answer 21

Premium Paid
* Employer pays 100% of premiums - Not a taxable benefit
* Employer and employee each pay part – part paid by employee not taxable benefit
* Employee pays 100% - Not deductible

Benefit received
* Employer pays 100% of premiums – Benefit received is taxable
* Employer and employee each pay part – Benefit is taxable but employee can deduct premium paid by the employee since the last time benefits were received until the end of the year which the benefit was received
* Employee pays 100% - Not taxable

Question 22

Employment benefit- Non Group Insurance Plans Sickness/ Accident claims and premiums

Answer 22

Premium Paid
* Employer pays 100% of premiums - Taxable benefit
* Employer and employee each pay part – part paid by employee taxable benefit
* Employee pays 100% - Not deductible
Benefit received
* Employer pays 100% of premiums – Benefit received is not taxable
* Employer and employee each pay part – Benefit is not taxable and employee can’t deduct premium paid
* Employee pays 100% - Not taxable