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Tax Free Benefits

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Tax-free (or reduced tax) Employee Benefits

Personal tax -> Tax free benefits for employees
Business -> Tax free benefits for employees

Allowances for motor vehicle use

See the tax-free motor vehicle allowances article on the Small Business page.

 

Allowances for transportation, board and lodging when you are employed at a special work site or remote work location

You are not allowed to write off the expenses of transportation, board or lodging which relate to your employment, but allowances that you receive from your employer for these costs may not be taxable to you.

If you have received allowances from your employer for board, lodging, or transportation in relation to working temporarily at a special work site or remote work location, these allowances may not be taxable to you, under certain conditions.  These conditions include:

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You maintained a principal place of residence at another location, and this residence was available to you throughout the time you were away at the work site, and due to the distance of your principal place of residence from the work site, you could not reasonably have been expected to commute daily to the work site, or

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The work site is at a location which is so remote from any established community that you could not reasonably be expected to establish and maintain a self-contained domestic establishment; and

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To perform your duties of employment you were required to be away from your principal place of residence, or at the special work site or location for not less than 36 hours.

For more information on this, see the Canada Revenue Agency (CRA) Interpretation Bulletin IT-91 Employment at Special Work Sites or Remote Locations.

 

Disability insurance income

Payments received from a disability insurance plan are not taxable when the employee has either paid the premiums, or the premium amounts paid by the employer have been included in the employee's income as a taxable benefit.  See the disability insurance article for more information.

Employee profit sharing plans

Tax is payable when distributions are made from an employee profit sharing plan to employees, but these payments are not subject to Canada Pension Plan or Employment Insurance premiums.

 

Private Health Services Plan benefits

Private health services plan (PHSP) payments made on behalf of employees and their dependents are not taxable to the employees, and there are no CPP or EI premiums charged on these payments.

If employees pay a portion of the PHSP premiums, this qualifies as a medical expense for purposes of the medical expense tax credit.

See the private health services plans article on the Business page.

 

Workers' compensation payments

Workers' compensation payments received are not taxable income.  They are, however, added into total income when filing the tax return, then deducted again to get to taxable income.  Total income is used for calculating many income-tested benefits.

 

Employee Home Relocation Loans

When a home relocation loan to an employee results in a taxable benefit being included in the employee's income, a home relocation loan benefit deduction is available to the employee, which would partially offset the taxable benefit.  See our article on Employee Loans and Employee Loan Subsidies.

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Revised: February 24, 2012

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