Tax-free (or reduced tax) Employee Benefits
Personal tax
-> Tax free benefits for employees
Business -> Tax free
benefits for employees
Allowances for motor vehicle
use
See the tax-free
motor vehicle allowances article on the Small Business page.
Allowances for
transportation, board and lodging when you are employed at a special work site or remote
work location
You are not allowed to write off the expenses of transportation,
board or lodging which relate to your employment, but allowances that you
receive from your employer for these costs may not be taxable to you.
If you have received allowances from your employer for board, lodging, or
transportation in relation to working temporarily at a special work site or
remote work location, these allowances may not be taxable to you, under
certain conditions. These conditions include:
For more information on this, see the Canada Revenue Agency (CRA) Interpretation Bulletin
IT-91
Employment at Special Work
Sites or Remote Locations.
Disability insurance income
Payments received from a disability insurance plan are
not taxable when the employee has either paid the premiums, or the premium
amounts paid by the employer have been included in the employee's income as
a taxable benefit. See the disability
insurance article for more information.
Employee profit sharing plans
Tax is payable when distributions are made from an
employee profit sharing plan to employees, but these payments are not
subject to Canada Pension Plan or Employment Insurance premiums.
Private Health Services Plan benefits
Private health services plan
(PHSP) payments made on behalf of employees and their dependents are not
taxable to the employees, and there are no CPP or EI premiums charged on these
payments.
If employees pay a portion of the PHSP premiums, this qualifies as a medical expense for purposes of the medical expense
tax credit.
See the private
health services plans article on the Business page.
Workers' compensation payments
Workers' compensation payments received are not taxable
income. They are, however, added into total
income when filing the tax return, then deducted again to get to taxable
income. Total income is used for calculating many income-tested
benefits.
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Revised: November 18, 2009
