Taxable benefits (employment)

Section 6(1)(a) of the Income Tax Act includes in an employee’s income the value of board, lodging and other benefits of any kind received or enjoyed by the employee, or by a person not dealing at arm’s length with the employee, in respect of, in the course of, or by virtue of the employment, except for the benefits that paragraph excludes. In a sale, the term comes up when a buyer reviews what the seller’s business gave its staff beyond wages.

Where the CRA explains it

The CRA’s Employers’ Guide, T4130, says it explains an employer’s responsibilities and shows how to calculate the value of taxable benefits or allowances. It covers items such as automobile benefits and group term life insurance premiums, and it says an employer who is a GST/HST registrant may have to remit GST/HST on the benefits it provides.

What to ask

• Which perks the business provided, and whether each was reported as a benefit.
• Whether payroll records show the value of benefits added to employees’ pay.
• Whether any GST/HST was calculated on benefits, where the registrant had to.

See how to check employment records in due diligence. A related plan type is covered under group benefits plan.