Taxation - Employment income Flashcards
Employment benefit – Counselling
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
Employment benefit – Discounts
Taxable
* Difference between fair market value of merchandise and price paid by employee(lower)
Non Taxable
* Discounts also given to general public
Employment benefit – Frequent Flyer Points
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
Employment benefit – Gifts and Awards
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
Employment benefit – Gifts and Awards (Length of Service Awards)
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
Employment Benefit - Health care
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
Employment benefit – Insurance Plans Life insurance
Taxable
* Premiums paid for life insurance on employee’s life if beneficiary is the employee
Non Taxable
* If the employer is the beneficiary
Employment Benefit-Meals
Taxable
* Subsidized meals offered to employee at less than the cost. Benefit is difference between cost of mean and payment made by the employee
Employment benefit- Pension Plans
Non Taxable
* Employer contributions to Registered Pension Plans (RPP), Deferred Profit Sharing Plans and Canada Pension Plan
Employment benefit- Recreational facilities and Club dues
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
Employment benefit- Reimbursements
Taxable
* If reimbursement is for personal expenses
Non Taxable
* If reimbursement is for employment related expenses
Employment benefit – Relocation payments
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
Employment Benefit – Relocation payments; Reimbursements for housing costs
Taxable
* One half of reimbursement in excess of 15,000
Employment Benefit - School services
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.
Employment Benefit – Severance pay
Severance payments are taxable
Employment Benefit – Signing Bonus
Signing Bonuses are taxable
Employment benefit – Tools
Taxable
* If cost of tools is reimbursed and if employee owns the tools after reimbursement
Non Taxable
* In employer owns the tools after reimbursement
Employment Benefit – Transportation passes
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)
Employment Benefit – Tuition fees
Taxable
* Tuition fees paid or reimbursed for benefit of the employee
Non Taxable
* For benefit of the employer
Employment benefit – Uniforms
Non Taxable
* Distinctive uniforms and special clothing supplied by employer to be worn by employee while carrying out their employment duties
Employment benefit- Group Insurance Plans Sickness/ Accident claims and premiums
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
Employment benefit- Non Group Insurance Plans Sickness/ Accident claims and premiums
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
