When parking is provided by an employer to an employee, the
fair market value of the parking, less any payment by the employee for the
parking, is generally a taxable benefit to the employee. The benefit
amount should be included in income when payroll deductions for income tax, Canada
Pension Plan (CPP) and Employment Insurance (EI) are calculated, and is
included as employment income on the T4.
There are situations in which parking may not be considered
a taxable benefit, such as:
The employee requires an automobile to commute to work
daily, because of a physical disability that limits mobility
The parking is generally available free of charge to
both employees and the general public, such as in a shopping centre or
industrial park.
The parking provided is scramble parking - this means
there are fewer parking spots than there are employees wishing to use a
spot, and the spaces are available on a first-come, first served
basis. There must be significantly fewer spots than employees
desiring a spot. CRA new administrative
policy December 2022 - the benefit is not taxable if all
of the following apply:
Not more than 2 parking spaces available for every 3 employees who
want parking (scramble parking), and
Parking spaces are not assigned (random or uncertain), and
Parking spaces are offered to all employees who want parking.
The parking is provided for business purposes - the
employee is regularly (on average 3 or more days per week) required to use
a vehicle in the performance of his or her job, such as travelling
off-site to meetings or service calls.
COVID-19 Commuting and Parking Benefits
Effective from March 15, 2020 until December 31, 2022, if an employee continues to perform their employment duties at their regular place of employment and is reimbursed by their employer with a reasonable allowance, this will not be considered taxable if these costs are over and above the employee's normal commuting costs.
If an employee is provided or reimbursed for parking,
the benefit is not taxable if all of the following apply:
COVID-19 caused a closure of the place of employment during the period,
including situations where:
the employees were sent home by the employer
the employees were given the option to work from home on a full-time
basis due to the pandemic
parking benefit relates to the period when the place of employment was
closed.
The taxable fair market value of the parking spot is
generally the market price for a similar spot in the surrounding area.
Therefore, if a similar spot in the surrounding area is free,
there is no taxable benefit.
If the employer provides certain employees with reserved
spots, this would probably be considered a taxable benefit.
Tax Court Cases re Employee Parking Benefit
A Tax Court of Canada case, Smith
v. The Queen, 2017 TCC 62, dismissed an appeal by a Jazz Aviation LP
employee who was assessed a taxable benefit for the value of a parking pass
provided to him by Jazz. Smith appealed to the Federal Court of Appeal, Smith v. Canada, 2019 FCA 173,
but lost this appeal as well, but on different grounds. The FCA judge
found that Smith had indeed received an economic benefit, and that whether the
employer also received a benefit from providing the pass did not matter.
The August 2019
Life in the Tax Lane video discusses this case.
Determining whether employer-provided parking is a taxable
benefit is not a simple issue, as indicated by the number of Tax Court Cases
that can be found. Another such case, where the taxpayer appealed and won,
is Long
v. The Queen, 2010 TCC 153.