News and Insights

CRA Employer’s Guide T4130, “Taxable Benefits and Allowances”

Tax Development Nov 22, 2010

The Canada Revenue Agency has released its annual revision of the employer’s guide to taxable benefits and allowances.  This guide explains an employer’s responsibilities in determining taxable benefits and how to calculate the value of benefits or allowances, including the GST/HST treatment of employee benefits.

As announced in the federal budget on March 4, 2010, there are several changes to the treatment of employee stock option benefits.  Employees will no longer be able to defer the taxable benefit on a qualifying acquisition.  Where a stock option benefit has been deferred and the value of the stock has decreased significantly, affected taxpayers may be eligible for special relief.  

Where employee stock options have been issued after 4 p.m. on March 4, 2010, the employee can only claim the securities option deduction if the employee exercises his or her options by acquiring shares of their employer or the employer elects not to claim a deduction for the cash-out payment in respect of the employee’s disposition of rights under the agreement.  

Furthermore, effective January 1, 2011, employers are required to withhold and remit tax when an employee exercises their stock options.  

Finally, the guide reflects Ontario and British Columbia becoming participating provinces, effective July 1, 2010, with HST rates of 13% and 12% respectively.  Also effective July 1, 2010, the HST rate increased in Nova Scotia from13% to 15%.  

CRA T4130