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Employee Parking Provided by Employer
Income Tax Act s. 6(1)(a)
When parking is provided by an employer to an employee, the fair market value of the parking, less any payment by the employee for the parking, is generally a taxable benefit to the employee. The benefit amount should be included in income when payroll deductions for income tax, Canada Pension Plan (CPP) and Employment Insurance (EI) are calculated, and is included as employment income on the T4.
There are situations in which parking may not be considered a taxable benefit, such as:
 | The employee requires an automobile to commute to work daily, because of a physical disability that limits mobility | ||||||
| The parking is generally available free of charge to both employees and the general public, such as in a shopping centre or industrial park. | ||||||
| The parking provided is scramble parking - this means
there are fewer parking spots than there are employees wishing to use a
spot, and the spaces are available on a first-come, first served
basis. There must be significantly fewer spots than employees
desiring a spot. CRA new administrative
policy December 2022 - the benefit is not taxable if all
of the following apply:
| ||||||
| The parking is provided for business purposes - the employee is regularly (on average 3 or more days per week) required to use a vehicle in the performance of his or her job, such as travelling off-site to meetings or service calls. |
COVID-19 Commuting and Parking Benefits
Effective from March 15, 2020 until December 31, 2022, if an employee continues to perform their employment duties at their regular place of employment and is reimbursed by their employer with a reasonable allowance, this will not be considered taxable if these costs are over and above the employee's normal commuting costs. If an employee is provided or reimbursed for parking, the benefit is not taxable if all of the following apply:
| COVID-19 caused a closure of the place of employment during the period,
including situations where:
| ||||
| parking benefit relates to the period when the place of employment was closed. |
See:
Video Tax News Life in the Tax Lane February 2022, as well as
Employer-provided benefits and allowances re parking costs - CRA
Employer-provided benefits and allowances: CRA and COVID-19
Taxable Value of Parking Spot
The taxable fair market value of the parking spot is generally the market price for a similar spot in the surrounding area. Therefore, if a similar spot in the surrounding area is free, there is no taxable benefit.
If the employer provides certain employees with reserved spots, this would probably be considered a taxable benefit.
Tax Court Cases re Employee Parking Benefit
A Tax Court of Canada case, Smith v. The Queen, 2017 TCC 62, dismissed an appeal by a Jazz Aviation LP employee who was assessed a taxable benefit for the value of a parking pass provided to him by Jazz. Smith appealed to the Federal Court of Appeal, Smith v. Canada, 2019 FCA 173, but lost this appeal as well, but on different grounds. The FCA judge found that Smith had indeed received an economic benefit, and that whether the employer also received a benefit from providing the pass did not matter. The August 2019 Life in the Tax Lane video discusses this case.
Determining whether employer-provided parking is a taxable benefit is not a simple issue, as indicated by the number of Tax Court Cases that can be found. Another such case, where the taxpayer appealed and won, is Long v. The Queen, 2010 TCC 153.
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Tax Tip: Make sure you know the tax status of your parking privileges!
Revised: September 20, 2024