T1 Form - Taxable benefits for employees.

What Are Taxable Employee Benefits?

Recently Benefits Canada asked the question, “When are employee benefits taxable?”

The article suggests that deciding whether a benefit provided to employees is taxable is often not as easy as it might seem.

What are taxable employee benefits? The Income Tax Act is just not as cut and dry as one might suspect regarding benefits, and the courts leave much open to interpretation. In part, the courts are often a more reliable source of information than the Income Tax Act itself.

Tax Exemptions Can Be Moving Targets

As a general rule of thumb, Benefits Canada states that if the benefit primarily targets the employer it is non-taxable to the employee. For example, if an employer pays membership fees for an employee, those fees are considered a condition of employment. In this instance, the fees are not taxable.

However, if the beneficiary of the tax benefit is an employee, there are exemptions specifically created for a wide variety of circumstances that need to be carefully considered and addressed. Kevin Stienstra, a senior tax manager at Grant Thornton LLP, says, “You can also look at the facts around a particular benefit to see whether an argument can be made that it’s non-taxable.”

CRA Monetary Limits on Employee Benefits

It is important to look to specific exemptions (such as company holiday parties) to avoid a tax hit on the value of the benefit.

Holiday parties for example, are non-taxable up to $100 for each employee. However, if the total amount for even one employee is greater than $100, then the entire expenditure for the party becomes taxable, not just the overage amount.

Gift certificates and cash are always taxable, while non-cash awards escape taxation only if their value for the year is less than $500.

Awards are also only considered for workplace contributions and not for job performance. Gifts are deemed tax free only if presented on special occasions.

Caught in The Act

As mentioned in the article, based on the courts and the strength of cases, there is often a reliable source for determining what constitutes a tax benefit. However, you cannot rely 100% on this source alone.

Blend your findings there, together with the administrative policies of Canada Revenue Agency, and you will have a more consistent idea of how taxable benefits apply to your organization or company.

For further information on taxable employee benefits, read the entire Benefits Canada article online or contact Benefit Strategies in Edmonton, Alberta at 1-780-437-5070.

You might also like our article on the Top 10 Employee Benefits in Canada.

Older man with laptop at a table.

Employee Benefit Plans for Employees Over 65 Years

Are there benefit plans for seniors now that retirement is a thing of the past and more employees in Canada are working over the age of 65? Baby boomers in the workplace have a variety of reasons for continuing to work. For some, it is an economic necessity. For others, it is by choice.

According to a Benefits Canada article, only 35% of Canadian respondents have the necessary employee benefits plan in place to address a workforce with older workers over 65.

This aging workforce presents employers with some unique challenges regarding benefit plans for seniors. As more experienced and skillful employees remain on the job longer, benefit services planning will require adjustments to address the ongoing health issues specific to an older sector of the population.

Proportionately, older boomers in the workplace tend to have more ailments than the balance of the population, which in turn, means that their health claims will be higher.

Do you have an aging workforce? Are there boomers in your workplace? If so, there are two ways you can start addressing their employee benefits issues:

  1. Review employee benefits coverage
  2. Examine you collective agreements

Review Employee Benefits Coverage

Historically, Canadian health care plans have not provided for a population in this boomer age that continues to work past the age of 65. The average benefit plan has varying degrees of coverage for older employees and often decreased coverage where long-term, and life benefits are concerned.

Some health care insurers are beginning to develop forward-looking programs that specifically address the ever-widening niche of baby boomers in the workplace.

Examine Your Collective Agreements

One of the circumstances to analyze is if employees are working under a collective agreement. Unions have filed grievances in some instances when employee benefits are terminated or decreased after the age of 65.

An employer may need to review their policies on employee benefits for seniors in light of their collective agreements and ensure that their aging demographic does not experience coverage diminishment or disappearance altogether.

If you are over 65 and have questions about employee benefits for seniors and aging baby boomers in the workplace, please call Benefit Strategies in Edmonton, Alberta at 1-780-437-5070 to discuss your options on various benefits packages.

You might also like our blog on What Does Employee Health and Wellness Mean to Your Business.