tax filings

Canada Revenue Agency (CRA) Employees Strike

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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

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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)

Paying RRSPs to your Employees – What you Need to Know

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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

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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

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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

A 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

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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.

Taxability of Child Care Expenses for Employees

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Child care is not taxable only if all of the following conditions are met:

  • the services are provided at your place of business
  • the services are managed directly by you
  • the services are provided to all of the employees at minimal or no cost
  • the services are not available to the general public, only to employees

If not all of the conditions are met, the taxable benefit is the fair market value (FMV) minus any amount that the employee pays for the service.

When you subsidize a facility operated by a third party in exchange for subsidized rates for your employees, the amount of the subsidy is considered a taxable benefit for the employee.

Government of Canada affordability incentives for Canadians – September 2022 update

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Doubling the GST Credit – the government is proposing to double the GST Credit for six months. Single Canadians without children would receive up to an extra $234 and couples with two children would receive up to an extra $467 this year. Seniors would receive an extra $225 on average. The proposed extra GST Credit amounts would be paid to all current recipients through the existing GST Credit system as a one-time, lump-sum payment before the end of the year, pending Parliamentary approval and Royal Assent of enabling legislation. Recipients would not need to apply for the additional payment, but should file their 2021 tax return if they have not done so already to be able to receive both the current GST credit and the additional payment.

The Canada Dental Benefit would be provided to children under 12 who do not have access to dental insurance, starting this year. Direct payments totalling up to $1,300 per child over the next two years (up to $650 per year) would be provided for dental care services. This is for families with adjusted net income under $90,000, and will allow children under 12 to receive the dental care.

The one-time top-up to the Canada Housing Benefit would deliver a $500 payment to renters who are struggling with the cost of housing. The federal benefit will be available to applicants with an adjusted net income below $35,000 for families, or below $20,000 for individuals, who pay at least 30 per cent of their adjusted net income on rent.

How to collect, file and pay GST

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Register for a GST account if you are an eligible entity and haven’t already registered 

To find out if you should register for a GST account, click When to register and start charging the GST.

A GST account number is part of a business number (BN) that is received after registering for a GST account online, by mail or by fax, or by telephone. 

Non-residents who want to register for a GST account can visit: Guide RC4027, Doing Business in Canada – GST Information for Non-Residents.

Charge and collect GST

1. Which rates to charge

To calculate the amount of tax to charge with the CRA’s GST Calculator, GST registrants must know their place of supply and type of supply. If the location in which they make their sale, lease, or other supply charges provincial sales tax (PST), calculate the GST based on the price without the PST. 

Note: Whether or not registrants should charge the tax may depend on who the taxable supply is made to as well as who makes the supply. To find out more, click Charge and collect the tax – which rate to charge.

2. Receipts and invoices

Registrants are required to:

  • let customers know if the GST is being applied to their purchase
  • use cash register receipts, invoices, contracts, or post signs at their place of business to inform customers whether the GST is included in the price, or added separately
  • if showing the tax payable or rate on tax in an invoice or receipt, show the total amount of GST payable for the supply or show the total GST rate that applies to the supply
  • if requested, provide customers with information that is required to claim an input tax credit or rebate
  • understand how to record the amount payable for a supply

The date of an invoice will generally determine when registrants need to report and remit the GST they charge (but there are exceptions).

3. What to do with collected GST

GST registrants are responsible for the tax that they collect until they send it to the CRA. Registrants are equally responsible for keeping records that will allow calculating the amount of:

  • GST that was required to be collected and GST collected
  • GST paid and payable on eligible business purchases and expenses
  • tax to be refunded, rebated, or deducted from their net tax

File a GST return and remit the tax you collected

At the end of each reporting period, GST registrants must:

Generally, registrants must file a return even if they don’t have any business transactions or net tax to remit. There are exceptions to this rule; filing deadlines depend on the registrants’ filing period.

A registrants’ remittance deadline is different than their filing deadline if they are either:

  • an annual filer and have to pay the GST by installments
  • an individual who is an annual filer with a December 31 fiscal year-end and has business income for tax purposes

If you are filing a personalized GST return, the due date is located at the top of your GST34-2, GST Return for Registrants.

Note: When a due date falls on a Saturday, a Sunday, or a public holiday recognized by the CRA, your remittance is considered on time if we receive it on the next business day.

GST returns can be filed electronically, by TELEFILE, or on paper. Before you choose a method, you must determine if you are required to file online and which online method you can use.

To find out how to calculate your net tax and what to include in your return, click Complete and file a return – Calculate the net tax. 

Once the CRA receives a registrant’s GST return, the CRA will send a notice of assessment if either:

  • the CRA owes you a refund or rebate
  • your amount owing is more than the amount you remitted 

A note on GST refunds/rebates

If you have to file any returns under the Excise Tax Act, the Income Tax Act, the Excise Act, 2001, or the Air Travellers Security Charge Act, but have not done so, any GST refund or rebate you are entitled to will be held until all required returns are filed. If you are a sole proprietor or partnership, your personal income tax refund will also be held.