Housing benefit

Taxability of Board and Lodging benefits and allowances given to Employees

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Board and lodging

You may give your employee board and lodging which means that you provide them with accommodations and, in some cases, food. If you provide only meals to an employee, see Meals.

If you provide free lodging, or free board and lodging, to an employee, the employee receives a taxable benefit. As a result, you have to add to the employee’s salary the fair market value of the board and lodging you provide. Report this amount in box 14, “Employment income,” and in the “Other information” area under code 30 at the bottom of the employee’s T4 slip.

If you provide subsidized lodging, or subsidized board and lodging, to an employee, the employee receives a taxable benefit. As a result, you have to add to the employee’s salary the fair market value of the board and lodging you provide, minus any amount the employee paid. Report this amount in box 14, “Employment income,” and in the “Other information” area under code 30 at the bottom of the employee’s T4 slip.

Exceptions to the rules

There are certain situations that can affect the value of the taxable benefit your employee gets if you provide free or subsidized board and lodging. The exceptions are as follows:

Board and lodging allowances paid to players on sports teams or members of recreation programs

You can exclude up to $377 (for 2021) per month from income for a board and lodging allowance for a participant or member of a sports team or recreational program if all of the following conditions are met:

  • you are a registered charity or a non-profit organization
  • participation with, or membership on the team or in the program is restricted to persons under 21 years of age
  • the allowance is for board and lodging for participants or members that have to live away from their ordinary place of residence
  • the allowance is not attributable to any services, such as coaching, refereeing, or other services to the team or program

Do not report the excluded income on a T4 slip.

Board, lodging, and transportation – Special work sites and remote work locations

It is possible for an employee to work at a location that is both a special work site and a remote work location. However, the benefit can only be excluded from the employee’s income once.

Note

If the special work site is in a prescribed zone, see Board, lodging, and transportation at a special work site in a prescribed zone.

Special work sites

Generally, a special work site is an area where temporary duties are performed by an employee who keeps a self-contained domestic establishment at another location as their principal place of residence. Because of the distance between the two areas, the employee is not expected to return daily from the work site to their principal place of residence.

Note

A self-contained domestic establishment (SCDE) is a house, an apartment, or other similar place of residence where a person usually sleeps and eats. It is generally a living unit with restricted access that contains a kitchen, bathroom, and sleeping facilities. The SCDE must be separate from any other living unit in the same building. A room in a hotel, dormitory, boarding house, or bunkhouse is not ordinarily considered to be a SCDE.

Usually, the GST/HST and PST applies on meals and accommodations you provide to an employee. In certain cases, such as long-term residential accommodation of one month or more, no GST/HST and PST applies. Where the GST/HST and PST does apply, include it in the value of the benefit.

Board and lodging at a special work site

You can exclude from income the value of board and lodging, or an allowance (not in excess of a reasonable amount) for board and lodging, that you provide to an employee who works at a special work site if all of the following conditions are met:

  • The employee’s duties required them to be away from their principal place of residence or to be at the special work site
  • The employee had to work at a special work site where the duties performed were of a temporary nature
  • The employee kept, at another location, a self-contained domestic establishment as their principal place of residence:
    • that, throughout the period, was available for the employee’s occupancy, and the employee did not rent it to any other person
    • to which, because of distance, the employee could not reasonably be expected to return daily from the special work site
  • The board and lodging, or the allowance (not in excess of a reasonable amount) for board and lodging, you provided to the employee had to have been for a period of at least 36 hours. This period can include time spent traveling between the employee’s principal place of residence and a special work site
Note

You can only exclude from income an allowance (not in excess of a reasonable amount) paid to your employee for board and lodging if they incurred the expense.

Transportation

You can exclude from income the value of free or subsidized transportation, or an allowance (not in excess of a reasonable amount) for transportation expenses, that you provide to an employee who works at a special work site if all of the following conditions are met:

  • the free or subsidized transportation, or the allowance, was for transportation between the special work site and your employee’s principal place of residence
  • the employee’s duties required them to be away from their principal place of residence or be at the special work site for a period of at least 36 hours
  • you (or a third party) provided board and lodging, or a reasonable allowance for board and lodging, to your employee for that period
Form TD4, Declaration of Exemption – Employment at a Special Work Site

If all of the conditions listed under Board and lodging noted above are met, you and the employee should fill out Form TD4, Declaration of Exemption – Employment at a Special Work Site. This allows you to exclude the benefit or allowance from the employee’s income. If you fill out Form TD4, do not include the amounts in box 14, “Employment income,” or in the “Other information” area under code 30 at the bottom of the employee’s T4 slip. After you fill out Form TD4 with the employee, keep it with your payroll records.

If all of the above-noted conditions are not met, do not fill out Form TD4. Treat the total amounts as part of the employee’s income. Make the necessary deductions and report the amounts on the employee’s T4 slip. This also applies to any part of an allowance for board, lodging, and transportation that is more than a reasonable amount.

Remote work locations

We usually consider a work location to be remote when it is 80 kilometers or more from the nearest established community with a population of at least 1,000 people.

A location is considered an established community if it has essential services or those services are available within a reasonable commuting distance. Essential services may include access to:

  • basic food store
  • basic clothing store, with merchandise in stock (not a mail-order outlet)
  • accommodation
  • certain medical services
  • certain educational facilities
Board and lodging at a remote work location

You can exclude from income the value of board and lodging, or an allowance (not in excess of a reasonable amount) for board and lodging that you provide to an employee who works at a remote work location if all of the following conditions are met:

  • the employee could not reasonably be expected to set up and maintain a self-contained domestic establishment because of the remoteness of the location and the distance from any established community
  • you did not provide a self-contained domestic establishment for the employee
  • the board and lodging, or allowances (not in excess of a reasonable amount) for board and lodging, were for a period of at least 36 hours when one of the following situations applied:
    • the employee had to be away from their principal place of residence because of their duties
    • the employee had to be at the remote work location
Transportation

You can exclude from income the value of free or subsidized transportation, or an allowance (not in excess of a reasonable amount) for transportation expenses, that you provide to an employee who works at a remote work location if all of the following conditions are met:

  • The employee’s duties required them to be away from their principal place of residence or to be at the remote work location for a period of at least 36 hours
  • The free or subsidized transportation, or the allowance, was for transportation between the remote work location and any location in Canada. If the remote work location is outside Canada, you can exclude the allowance for transportation between that location and any location in Canada or outside Canada
  • You (or a third party) provided board and lodging, or a reasonable allowance for board and lodging, to your employee for that period

If you need help determining whether a location qualifies as remote, see Interpretation Bulletin IT-91R, Employment at Special Work Sites or Remote Work Locations.

Form TD4, Declaration of Exemption – Employment at a Special Work Site

When there is an exemption for board, lodging, or transportation allowances you pay to employees who work at a remote work location, do not fill out Form TD4.

Payroll deductions

If you exclude a benefit for board, lodging, and transportation at a special work site or remote work location, it is not a taxable benefit. Do not deduct CPP contributions, EI premiums, or income tax.

Housing or utilities – benefit

If you provide an employee, including the superintendent of an apartment block, with a house, apartment, or similar accommodation rent free or for less than the fair market value (FMV) of such accommodation, there is a taxable benefit for the employee.

You have to estimate a reasonable amount for the housing benefit. It is usually the FMV for the same type of accommodation, minus any rent the employee paid.

In addition, the amount you pay on behalf of, or reimburse to your employee for utilities (such as telephone, hydro, natural gas, water, cable or internet) is also a taxable benefit. This is the amount that you include in the employee’s income as a utilities benefit.

If the employee occupies the accommodation for at least one month, the value of the accommodation is usually not subject to the GST/HST.

Special circumstances that reduce the value of a housing benefit

The following two factors may reduce the value of a housing benefit you provide to your employee:

  • Suitability of size
    Your employee may have to occupy an accommodation that is larger than they need (such as a single person in a three-bedroom house). To calculate the taxable housing benefit, you can reduce the value of the accommodation to equal the value of accommodation that is appropriate to your employee’s needs (in this case, a one- or two-bedroom apartment or house).
Note

If the accommodation you provide is smaller than your employee needs, we cannot allow any reduction in value.

  • Loss of privacy and quiet enjoyment
    If the accommodation you provide to your employee contains things like equipment, public access, or storage facilities that infringe on your employee’s privacy or quiet enjoyment of the accommodation, you can reduce the value of the housing benefit. The reduction has to reasonably relate to the degree of disturbance that affects your employee.

These two factors apply in the above order. If both circumstances apply to an accommodation, you should first reduce the value to equal the value of accommodation that suits your employee’s needs. Then, you should apply any reduction for loss of privacy and quiet enjoyment to that reduced value.

Housing or utilities – allowance

If you give your employee an allowance to pay for rent or utilities, include the allowance in your employee’s income as a taxable housing and/or utilities benefit.

Reporting the benefit

Report the taxable benefit for the utilities in box 14, “Employment income,” and in the “Other information” area under code 40 at the bottom of the employee’s T4 slip. Report the taxable benefit for housing in box 14 and in the “Other information” area under code 30.