The Canada Revenue Agency (CRA) has released an updated version of publication T4130, Employers’ Guide – Taxable Benefits and Allowances. This guide explains an employer’s responsibilities in determining taxable benefits, including how to calculate the value of benefits and allowances and the resulting GST/HST liability.
The most notable change from last year’s version is that the CRA’s COVID-19 pandemic relief policy, which allowed employers to reduce an automobile standby charge and operating cost benefit without meeting all the normal conditions, is no longer available. Under the previously available relief, employees who had been provided with an automobile by the same employer in 2019, 2020, and 2021 were permitted to use their 2019 automobile use to determine whether the vehicle was used primarily (i.e., more than 50%) for business purposes. This relief was put in place to address the fact that many employees used their employer-provided vehicles less often for business purposes because of pandemic lockdowns and reduced business activity, potentially impacting their eligibility for the reduced standby charge.
The reduced automobile standby charge and optional operating cost benefit calculation methods remain available to taxpayers provided they meet all the required conditions—the most important of which is use of the employer-provided automobile more than 50% for business purposes.
One of the most common taxable benefits provided to employees is an employer-provided automobile. The CRA has developed an Automobile Benefits Online Calculator that takes into account all of the rules for computing these benefits. Use of the calculator can take some of the uncertainty out of these otherwise complex calculations.