Understanding Common Taxable Benefits for Employees 

If you’re employed and worried about potential tax implications, this post is tailored for you. We’ll delve into the most frequent taxable benefits that employers offer their employees. 

1. Company Car Benefit

A prevalent taxable benefit for employees is the use of a company car, either owned or leased by the company. This benefit is termed the “standby charge.” Essentially, it’s a benefit you receive just by having access to the company vehicle. This charge will appear on your T4 slip. For instance, if your employer gives you a car worth $30,000 and you drive 20,000 KM annually, using the car 60% for work, the standby charge, calculated using the CRA’s online tool, would be $2,879. This amount would be reported on your T1 tax return and T4 slip, and you’d be taxed on it. 

Ways to Minimize the Standby Charge: 

• Opt for a less costly vehicle from your employer. The pricier the car, the higher the standby charge. 
• Limit personal use of the company car. More personal usage leads to a higher charge. 

Another taxable benefit related to company cars is the “operating cost-benefit.” This is calculated by multiplying your personal use kilometers by 27 cents. For instance, if you drive 10,000 KM for personal reasons in a year, the benefit would be $2,700. 

2. Company-Provided Home Internet and Cell Phone

The taxable benefit here corresponds to the portion of your cell phone and internet bills attributed to personal use. Say, if your combined bills amount to $200 and 80% of your usage is personal, the taxable benefit would be $160 monthly. However, if an employee’s cell phone usage results in extra charges due to exceeding the plan limit, there won’t be an added taxable benefit. 

Key Takeaway: Before accepting perks like a car, cell phone, or complimentary internet, weigh the taxable benefits that will reflect on your tax return. 

Other benefits, though less common, include stock options. For an exhaustive list of taxable benefits and allowances, it’s advisable to consult the Canada Revenue Agency Website.