Employer Provided Benefits and Allowances in Response to COVID-19
On December 15, 2020, the Canada Revenue Agency (CRA) released information on a number of employment-related issues in response to the effects of the COVID-19 pandemic, including employer provided taxable benefits and allowances. These positions are effective from March 15, 2020 to December 31, 2020.
Commuting Costs (including parking)
The CRA has always taken the position that travel between an employee’s home and a regular place of employment is generally personal travel. Parking costs at a regular place of employment are considered personal expenses.
The CRA acknowledges that employees who are required to commute to their regular place of employment to perform employment duties may incur additional commuting costs to minimize their risk of exposure during the COVID-19 pandemic. Employees may also incur costs to commute to their regular place of employment to pick up equipment that enables them to perform employment duties from home.
1. Employee continues performing their employment duties at their regular place of employment
The CRA will not consider commuting costs a taxable benefit where their employer pays for, reimburses, or provides a reasonable allowance for additional commuting costs incurred by that employee during the COVID-19 pandemic, that are over and above their normal commuting costs.
2. Employee is performing their employment duties at home because their regular place of employment is closed
The CRA will not consider commuting costs a taxable benefit where their employer pays for, reimburses, or provides a reasonable allowance for normal or additional commuting costs incurred by the employee to travel to their regular place of employment for any purpose that enables them to perform their employment duties from home (for example, to pick up equipment).
The CRA will not consider an employer-provided parking spot to be available for an employee’s use if the regular place of employment is closed due to COVID-19. In both of these scenarios, employers are required to maintain adequate records to prove that any allowances provided are reasonable in relation to the commuting costs incurred by the employee.
Home Office Equipment
As many employees are working from home due to the COVID-19 pandemic, the CRA will not consider home office equipment a taxable benefit where their employer pays for or reimburses up to $500 of computer or home office equipment to enable the employee to carry out their employment duties, provided the employee submits receipts to the employer.
The CRA’s existing policies recognize that an employer may pay for or reimburse the cost of an employee’s cell phone service plan, or Internet service at home to help carry out their employment duties. The portion used for employment purposes is not a taxable benefit.
Where an employer pays for, reimburses, or provides a reasonable allowance for meals to employees working at their regular place of employment during regular hours of work, the amount must be included in their employment income as a taxable benefit. However, the CRA’s existing policies maintain that there are certain circumstances where an employer can provide an overtime meal or allowance, or a subsidized meal, without the employee receiving a taxable benefit.
For additional information about what taxable benefits are available for employees please contact our tax accountants at Hogg, Shain & Sheck.