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.

This last month Benefits Canada asked the question, “Are massage therapy benefits for employee worthwhile?”

The question comes up frequently as many benefits plan sponsors are being pressured to deal with rising drug costs and forced to find other places to reduce benefits costs. Is a massage therapy something that benefits plan sponsors can no longer afford to cover?

In this blog post we will explore three topics related to massage therapy benefits for employees:

1. What employees are likely to use massage therapy and why
2. Whether massage therapy is a necessary employee benefit
3. The value of massage therapy as a way to deal with workplace stress

What plan members are using massage therapy and what are their reasons?

• Massage therapy services are popular among teenagers and younger, healthier plan members.
• 43% of plan members have submitted at least one claim for massage therapy in the past year, according to a 2016 Sanofi Canada Healthcare Survey.
• 50% of those who use massage therapy report the main reason is for treating a diagnosed or self-diagnosed injury.
• 38% of those who use massage therapy report the main reason is for relaxation or relieving tension.

Is massage therapy a necessary employee benefit?

In trying to answer this question, Benefits Canada provides several expert opinions:

Barbara Martinez, Practice Leader for Benefits Solutions and Group Benefits at Great-West Life Assurance Co.

Barbara explains that many advisory boards are questioning the value of massage therapy because it falls outside of the traditional definition of medically necessary, yet so many younger employees are opting to use it.

Peter Gove, Innovation Leader of Health Management at Green Shield Canada

Peter states, “Other interventions show much stronger medical evidence, yet are not covered.” According to the Sanofi study mentioned above, there is little scientific evidence backing the positive effects of massage therapy.

Chris Bonnett, Principal at H3 Consulting

Chris argues that massage therapy is a, “Valued benefit for significant segments of the population.”

Art Babcock, Senior Vice-President at Aon Hewitt

Art urges employers to create a strategic benefits plan to measure objectives and results when it comes to the benefits. He argues that without this level of accountability it’s, “Open season on benefits that to do not meet the traditional definition of ‘medically necessary’.”

The 2016 Sanofi study took a look at how massage therapy benefits and usage have changed in the last five years. The 2011 study predicted massage therapy as one of the fastest growing employee benefits. However, in 2016 83% of employee benefits plans were offering coverage for paramedical services like massage therapy but only 49% of members used the service.

Employees seek relaxation through massage therapy – is this a bad thing?

In the 2016 Sanofi Canada Healthcare survey mentioned above, 38% of respondents expressed a desire to relax and relieve tension and 40% said that the workplace negatively affects their ability to manage stress. Is massage therapy in your employee benefits plan a good way to encourage your employees to relax and destress?

Anne Nicoll, Vice President of Business Development at Medavie Blue Cross seems to think so: “So here we have plan members telling us that they’re using their plan to help them relax. Is that not a good thing?”

Does your employee benefits plan include massage therapy and are your employees using this to their advantage?

If you aren’t sure or if you need to set up a cost-effective benefits plan in your workplace for the first time, please email Benefit Strategies in Edmonton, Alberta or call us at 1-780-437-5070. We’d be happy to go over your options!

Have you ever wondered what is the best employee benefits by industry and how your package compares to employee benefits in other industry sectors?

A recent study by Glassdoor (an employer rating website) looked at over 470,000 reviews on company websites for businesses that fall into 8 leading industries. The objective was to see how employee benefits compare. Here are the results from highest to lowest, rating overall employee benefits by industry on a 5 star scale:

1. Finance
   3.72 out of 5 stars
2. Information Technology
   3.68 out of 5 stars
3. Manufacturing
   3.64 out of 5 stars
4. Education
   3.61 out of 5 stars
5. Health Care
   3.44 out of 5 stars
6. Business Services
   3.37 out of 5 stars
7. Retail
   3.11 out of 5 stars
8. Restaurants, Bars, Food Services
   2.73 out of 5 stars

Based on these survey results, Glassdoor concluded that:

• Employee benefits packages are highly diverse
• Access to employee benefits and the quality of benefits are important in overall employee satisfaction

At Benefit Strategies Inc. in Edmonton, Alberta, Canada, we believe that it is important to understand not only what a competitive benefits plan looks like for your industry or sector, but also the types of employee benefit plans offered across all job options in Canada.

Offering an employee benefits plan and coverage that you know your employees will value (and is competitive) is a key factor in attracting and retaining highly skilled employees.

Read the full article over at Benefits Canada.

To learn more about Benefit Strategies’ approach to designing an employee benefits plan to attract and retain good employees please call our employee benefits specialists in Edmonton at 1-780-437-5070.

The oil bust effect on benefits plans is a real cause for concern for employers. The decline of oil prices over these past few years has not only negatively impacted the Alberta economy but it has also had a detrimental impact on employee benefits according to Benefits Canada. This decline has made it difficult for HR departments since they now have less competitive benefits programs to offer in attracting talent.

What Is Driving Up Costs?

Instead of reducing the cost of employee benefits to the employer, this economic downturn can have the opposite effect. If one spouse or the other is laid off, the benefits plan of the employed spouse then becomes the sole plan.

Employees also tend to increase their usage of a benefits plan if they’re concerned that they might be laid off. They tend to want to purchase that new set of glasses, or get that dental work done before they are forced to live without the benefits.The oil bust effect on benefits is immediate.

Even apprehension about the potential of a layoff can increase the number of visits to psychologists, massage therapists, and acupuncturists. Companies may find themselves in a position of having to increase cost sharing by employees or reducing employee benefits coverage altogether.

Long Term Relief

Long-term relief is only likely to occur when oil prices rebound, and who knows how long that might take. Also, once spouses re-enter the workforce and begin using their own benefits programs again, per capita costs are likely to decrease.

While new benefits proposals from other carriers might offer some immediate relief, you must be aware that benefits rates could very well boomerang back once the economy starts to move again and your first renewal is due.

Do you still have questions about the oil bust effect on benefits? To help you navigate through Alberta’s interim economic crunch and explore better options for reducing employee benefits cost to you, the employer, please contact us online or call our Benefit Strategies advisors at 1-780-437-5070!

The Canadian Payroll Association (CPA) polled nearly 4,000 payroll practitioners to determine the country’s top employee benefits in Canada. Do you offer any of these most popular employee benefits in your workplace?

1. Health and Dental Insurance
2. Group Life Insurance
3. Training Expenses
4. Vehicle Allowances
5. Gifts and Awards
6. Cellular Phone Service
7. Counselling Services
8. Disability-related Employment Benefits
9. Income Maintenance Plans and other Insurance Plans
10. RRSP Contributions

Benefits Canada reports that each year over $901 billion in wages and taxable benefits are administered by Canada’s 1.5 million employers. If you provide employee benefits in Canada or are considering adding a competitive benefits plan to your workplace, you will need to review each type of employee benefit for tax implications when reporting employee income. Read more here.

Do you know how to properly administer both taxable and non-taxable employee benefits in your workplace? Call one of Alberta’s most trusted employee benefits companies, Benefits Strategies Inc., at 1-780-437-5070 to speak with one of our benefit advisors.