Reporting requirements for the Canadian Dental Care Plan 

he Canadian Dental Care Plan (CDCP) will provide dental coverage for uninsured Canadians with an adjusted family net income of less than $90,000. There are new reporting requirements that begin with the 2023 tax year for issuers (including employers and pension plan administrators) of the T4 Statement of Remuneration Paid and T4A Statement of Pension, Retirement, Annuity, and Other Income. For more information on the requirements for the CDCP visit Employers and pension plan administrators: Changes coming to T4/T4A reporting – Canada.ca.

Additional Canada Pension Plan (CPP) contributions required for 2024

On January 1, 2024, the government introduced a second earnings ceiling known as the Year’s Additional Maximum Pensionable Earnings (YAMPE). People who have income above the first earnings ceiling will contribute an additional percentage of the income they earn above the first earnings ceiling up to the second earnings ceiling. This additional CPP contribution is part of the CPP enhancement known as second additional CPP contributions (CPP2).  It will not replace the first earnings ceiling. Instead, it will subject worker’s earnings to two earnings limits.

Contribution rate split (employee/ employer)Contribution rate (self-employed)YMPE, or first earnings ceilingYAMPE, or second earnings ceilingMaximum yearly CPP2 contribution (employee /employer)Maximum yearly CPP2 contribution (self-employed)
4%8%$68,500$73,200$188$376

Starting in 2024, employees and employers will each contribute an additional 4% on earnings above the first earnings ceiling (the YMPE), up to the amount of the second earnings ceiling (the YAMPE). These are their CPP2 contributions.  The rates in 2024 will be as follows:

Employees

  • When you do your taxes, your CPP contributions must be separated into two parts: CPP base alongside first additional CPP contributions and CPP2 contributions (starting in 2024). Base contributions are calculated at a rate of 4.95% while first CPP contributions are calculated at a rate of 1%. Both are reported together in Box 16 on the T4 slip. Box 16A will be added to the T4 slip to report any CPP2 contributions starting with the 2024 tax year. Any year you do not make CPP2 contributions, Box 16A will be left blank.
  • You can claim a 15% non-refundable tax credit for your base CPP contributions. You will claim a tax deduction for the enhanced portions such as first additional and CPP2 contributions.
  • automatically separate and apply the base and enhanced contributions for you.

Employers

  • Withhold and remit CPP2 contributions the same way as base and first additional CPP contributions.
  • Report employees base and first additional CPP contributions in Box 16 on the T4 slip. For T4 slips filed for calendar year 2024 and after, report the amount of CPP2 contributions you deducted from your employee in Box 16A.
  • Do not report any amount using Box 16A if you did not deduct CPP2. All employer contributions to the CPP are tax deductible.

Self-employed

  • Send your CPP contributions when you file your T1 return.
  • Your contributions are based on net business income.
  • When you do your taxes, you will separate your CPP contributions into two parts: CPP base alongside first additional CPP contributions, and CPP2 contributions (starting in 2024). The base contribution is the amount that is calculated at a rate of 9.9%, and first additional CPP contributions are calculated at a rate of 2%. You can claim a 15% non-refundable tax credit on 4.95% of the base CPP contributions, and claim a tax deduction on the other 4.95%. You can also claim a tax deduction on the enhanced portion of your contributions (2%). Starting in the 2024 tax year, CPP2 contributions will be calculated at a rate of 8%. All CPP2 contributions are tax deductible.

Canada Revenue Agency (CRA) Employees Strike

On April 19, 2023, the Union of Taxation Employees (PSAC-UTE) members have gone on strike.

As a result of PSAC-UTE’s decision to begin labour action, Canadians should expect that some CRA services will be delayed or unavailable. While there are no plans to extend tax filing deadlines, the CRA will continue to accept all tax returns. Those that are filed digitally, which represent the vast majority of T1 and T2 returns, will largely be processed automatically by our systems without delay.

For information on any impacts to services, Canadians can consult the Contact Us page for more details and current wait times and Labour disruptions impact at the Canada Revenue Agency pages for more information as the situation continues to evolve.

Taxability of Recreational Facilities and Club Dues Paid for Employees

The use of a recreational facility or club is a taxable benefit for an employee in any of the following situations:

  • You pay, reimburse, or subsidize the cost of a membership at a recreational facility, such as an exercise room, swimming pool, or gymnasium
  • You pay, reimburse, or subsidize the cost of memberships to a business or professional club (that operates fitness, recreational, sports, or dining facilities for the use of their members but whose main purpose is something other than recreation)
  • You pay, reimburse, or subsidize the cost of membership dues in a recreational facility of the employee’s choice, up to a set maximum. In this case, it is the employee who has paid for the membership, owns it, and has signed some kind of contract with the company providing the facility
  • You pay, reimburse, or subsidize the employee for expenses incurred for food and beverages at a restaurant, dining room lounge, banquet hall, or conference room of a recreational facility or club
  • You provide recreational facilities to a select group or category of employees for free or for a minimal fee, while other employees have to pay the full fee. There is a taxable benefit for employees who do not have to pay the full fee

However, the use of a recreational facility or club does not result in a taxable benefit for an employee in any of the following situations:

  • You provide an in-house recreational facility and the facility is available to all your employees. This applies whether you provide the facilities free of charge or for a minimal fee
  • You make an arrangement with a facility to pay a fee for the use of the facility, the membership is with you and not your employee and the facility or membership is available to all your employees. Membership will be considered to be made available to all employees as long as each employee can use the membership even if an employee chooses not to
  • You provide your employee with a membership in a social or athletic club and it can be clearly demonstrated that you are the primary beneficiary of the membership. The membership is a taxable benefit to your employee if the membership in or use of the club’s facilities provides only an indirect benefit to you. This would be the case where the employee becomes physically healthier as a result of using the club’s facilities and becomes generally better able to perform their duties (for example, fewer sick days, less downtime, remain fit for duty)

Taxability of Board and Lodging benefits and allowances given to Employees

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.

Paying RRSPs to your Employees – What you Need to Know

Contributions you make to your employee’s RRSP and RRSP administration fees that you pay for your employee are considered to be a taxable benefit for the employee. However, this does not include an amount you withheld from the employee’s remuneration and contributed for the employee.

If the GST/HST applies to the administration fees, include it in the value of the benefit.

Payroll deductions

Contributions you make to your employee’s RRSPs are generally paid in cash and are pensionable and insurable. Deduct CPP contributions and EI premiums.

However, your contributions are considered non-cash benefits and are not insurable if your employees cannot withdraw the amounts from a group RRSP (except for withdrawals under the Home Buyers’ Plan or Lifelong Learning Plan) before the employees retire or cease to be employed.

Although the benefit is taxable and has to be reported on the T4 slip, you do not have to deduct income tax at source on the contributions you make to your employee’s RRSPs if you have reasonable grounds to believe that the employee can deduct the contribution for the year.

Administration fees that you pay directly for an employee are considered taxable and pensionable. Deduct CPP contributions and income tax. These are considered a non-cash benefit, so they are not insurable. Do not deduct EI premiums.

Taxabilty of Insurance Premiums

The answer to this question is it depends.

These types of insurance follow similar taxing rules:

  • group life insurance, 
  • dependant life insurance, 
  • accidental death insurance and 
  • critical illness insurance.

Any premiums the employer pays for employees’ insurance types noted above less the portion the employee pays (either directly or through reimbursements) are taxable benefits. 

Here is the link if you wanted additional information: https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/payroll/benefits-allowances/group-term-life-insurance-policies-employer-paid-premiums.html

For short/long-term disability premiums, if the employer pays for the premiums, they are not taxable a benefit.  If the employee later gets payouts from this insurance, then it would be taxable (on the T4) normally issued by the insurance company. Conversely, if all employees pay their own short/long-term disability premiums, any benefits they may later receive are tax-free.

Taxability of Gifts, Awards, and Long-service Awards given to Employees

A gift or an award that you give an employee is a taxable benefit from employment, whether it is cash, near-cash, or non-cash. However, we have an administrative policy that exempts non-cash gifts and awards in some cases.

Cash and near-cash gifts or awards are always a taxable benefit for the employee. A near-cash item is one that functions as cash, such as a gift certificate or gift card, or an item that can be easily converted to cash, such as gold nuggets, securities, or stocks. For more information, see Rules for gifts and awards and Policy for non-cash gifts and awards.

 Example of a near-cash gift or an award

You give your employee a $100 gift card or gift certificate to a department store. The employee can use this to purchase whatever merchandise or service the store offers. We consider the gift card or gift certificate to be an additional remuneration that is a taxable benefit for the employee because it functions in the same way as cash.

Examples of non-cash gifts or awards

You give your employee tickets to an event on a specific date and time. This may not be a taxable benefit for the employee since there is no element of choice, if the other rules for gifts and awards are met.

You give your employee a voucher (which may be a ticket or a certificate) that entitles the employee to receive an item for a set value at a store. For example, you may give your employees a voucher for a turkey valued up to $30 as a Christmas gift, and for convenience, you arrange for your employees to go to a particular grocery store and exchange the voucher for a turkey. The employees can only use the voucher to receive a turkey valued up to $30 (no substitutes).

Vouchers and event tickets are generally considered non-cash gifts and awards.

A gift card or gift certificate to a movie theatre is not considered an event ticket. It is considered a near-cash gift or an award. With a gift card or gift certificate to a movie theatre, your employee can choose which movie to see and when to see it, or they can use the card or certificate at an arcade or concession stand.

Rules for gifts and awards

gift has to be for a special occasion such as a religious holiday, a birthday, a wedding, or the birth of a child.

An award has to be for an employment-related accomplishment such as outstanding service, or employees’ suggestions. It is recognition of an employee’s overall contribution to the workplace, not recognition of job performance. Generally, a valid, non-taxable award has clearly defined criteria, a nomination and evaluation process, and a limited number of recipients.

An award given to your employees for performance-related reasons (such as performing well in the job they were hired to do, exceeding production standards, completing a project ahead of schedule or under budget, putting in extra time to finish a project, covering for a sick manager/colleague) is considered a reward and is a taxable benefit for the employee.

If you give your employee a non-cash gift or an award for any other reason, this policy does not apply and you have to include the fair market value of the gift or award in the employee’s income.

The gifts and awards policy does not apply to cash and near cash items or to gifts or awards given to non-arm’s length employees, such as your relatives, shareholders, or people related to them.

For more information on gifts and awards outside our policy, go to Gifts and awards outside our policy.

Value

Use the fair market value (FMV) of each gift to calculate the total value of gifts and awards given in the year, not its cost to you. You have to include the value of the GST in the FMV.

Policy for non-cash gifts and awards

You may give an employee an unlimited number of non-cash gifts and awards with a combined total value of $500 or less annually. If the FMV of the gifts and awards you give your employee is greater than $500, the amount over $500 must be included in the employee’s income. For example, if you give gifts and awards with a total value of $650, there is a taxable benefit of $150 ($650 – $500).

Items of small or trivial value do not have to be included when calculating the total value of gifts and awards given in the year for the purpose of the exemption. Examples of items of small or trivial value include:

  • coffee or tea
  • T-shirts with employer’s logos
  • mugs
  • plaques or trophies

Long-service awards

As well as the gifts and awards in the policy stated above, you can, once every five years, give your employee a non-cash long-service or anniversary award valued at $500 or less, tax-free. The award must be for a minimum of five years’ service, and it has to be at least five years since you gave the employee the last long-service or anniversary award. Any amount over $500 is a taxable benefit.

If it has not been at least five years since the employee’s last long-service or anniversary award, then the award is a taxable benefit. For example, if the 15 year award was given at 17 years of service, and then the next award is given at 20 years of service, the 20 year award will be a taxable benefit, since five years will not have passed since the previous award.

The $500 exemption for long-service awards does not affect the $500 exemption for other gifts and awards in the year you give them. For example, you can give an employee a non-cash long-service award worth $500 in the same year you give them other non-cash gifts and awards worth $500. In this case, there is no taxable benefit for the employee.

Note

If the value of the long-service award is less than $500, you cannot add the shortfall to the annual $500 exemption for non-cash gifts and awards.

You can answer a series of questions on our Web site to help you determine if there is a taxable benefit. For more information, go to Rules for gifts and awards.

Awards from a manufacturer

If a manufacturer of goods gives cash awards or non-cash awards to the dealer of the goods, the manufacturer does not have to report the awards on an information slip.

However, if the dealer passes on cash awards to an employee, the dealer has to report the cash payment in box 14, “Employment income,” and in the “Other information” area under code 40 at the bottom of the employee’s T4 slip. If the dealer passes on non-cash awards to an employee, the dealer may not have to report the awards in the employee’s income if the other conditions of the awards policy are met.

If a manufacturer gives a cash award or a non-cash award directly to the employee of a dealer or other sales organization, the manufacturer has to report the value of the award as a benefit using code 154, “Cash award or prize from payer,” in the “Other information” area at the bottom of the T4A slip.

Taxability of Cell Phone and Internet Services Given to Employees

If you provide your employee with a cell phone (or another handheld communication device) that you own, to help carry out their employment duties, the fair market value (FMV) of the cell phone or device is not a taxable benefit.

However, if you reimburse your employee for the cost of their own cell phone (or another handheld communication device), the FMV of the cell phone or device is considered a taxable benefit to the employee. This is the case even if the employee used, lost, or damaged the cell phone or device while carrying out their employment duties.

If you pay for, or reimburse the cost of an employee’s cell phone service plan, or Internet service at home to help carry out their employment duties, the portion used for employment purposes is not a taxable benefit.

If part of the use of the cell phone or Internet service is personal, you have to include the value of the personal use in your employee’s income as a taxable benefit. The value of the benefit is based on the FMV of the service, minus any amounts your employee reimburses you. You can only use your cost to calculate the value of the benefit if it reflects the FMV.

For cellular phone service only, we do not consider your employee’s personal use of the cellular phone service to be a taxable benefit if all of the following apply:

  • the plan’s cost is reasonable
  • the plan is a basic plan with a fixed cost
  • your employee’s personal use of the service does not result in charges that are more than the basic plan cost

You, as the employer, are responsible for determining the percentage of employment use and the FMV. You have to be prepared to justify your position if we ask you to do so.

Note

If you give your employee an allowance for cellular phone or Internet services, the allowance must be included in the employee’s income.