Employee Benefits: Taxable or not?

Risk Management Financial Planning

Employee Benefits: Taxable or not?

Risk Management Financial Planning

Does your T4 say you made more than you thought you did? Perhaps you didn’t consider your taxable benefits. Find out what is and isn’t taxable.

When you get your T4 slip in January or February, you may wonder why the employment income reported in Box 14 is higher than the salary or wages you earned for the year. That’s because your employer must report premiums it pays for certain group benefits and the value of some perks as a taxable benefit, and you must pay taxes on those amounts.

In addition, both you and your employer have to make Canada or Quebec Pension Plan contributions on the value of all taxable benefits plus Employment Insurance contributions on taxable benefits you receive in cash.

Here are eight common employee benefits and how the CRA (Canada Revenue Agency) treats them for tax purposes:

  • Group Health/Life Benefits
  • Group Short or Long Term Disability
  • Non-Group Insurance Plans
  • Pension Plan/Group Registered Retirement Savings Plan
  • Cellphone
  • Equipment for working from home
  • Tuition Reimbursement
  • Gifts and Awards

To read the details about how the CRA treats each of these employee benefits in this article by SunLife, CLICK HERE. If you have questions be sure to contact Harry Perler or David Olejnik.