Taxable Benefits a Hot Spot in Audits

By Andrew Rickard | March 12 2015 09:35AM

When auditing employers, the Canada Revenue Agency (CRA) and Revenu Québec (RQ) often find that taxable benefits and allowances have been improperly assessed.

According to the Canadian Payroll Association (CPA), 7 out of 10 of the most commonly requested adjustments to an employer's payroll are related to the improper reporting of taxable benefits. The CPA notes that it is up to employers to determine whether the benefits they offer are taxable to their employees. If they are, the employer must add the value of those benefits to the employees’ reportable income and then withhold, remit, and report the deductions to the CRA and RQ.

The CPA says that employers and employees alike are often surprised at what is considered to be a taxable employment benefit. For example, the CPA says many people are not aware that, under statutory requirements, most gifts received by employees from their employer must be accounted for as taxable benefits. There is an exception, however, for gifts worth less than $500.

"Other common examples of taxable benefits include automobile benefits and allowances, parking and transit passes, employee loans and stock options, travelling expenses for a spouse or partner, and many other fringe benefits that may be received by an employee in the course of employment," notes the CPA.

The CPA is offering seminars about taxable benefits and allowances in locations across Canada from March through October.