Taxable benefits

A taxable benefit is a good or service that an employer offers an employee for their personal use: company car, parking, group insurance. Even if no money is paid, its value is added to taxable income and appears on year-end statements, the federal T4 and the Quebec Relevé 1.

Brief

This is added to the employee's taxable income, even when no money is paid out.
Examples: company car provided, parking paid, insurance premiums paid by the employer
In Quebec, certain benefits are taxable at the provincial level only (such as employer-paid health insurance).
The employer often has to add the GST (federal tax) and the QST (Quebec tax).

Why does this matter?

The company car, cell phone, and company-paid insurance: these perks all have value in the eyes of the tax authorities. Take a business owner who drives a company-paid vehicle and also uses it on weekends: this personal use becomes a taxable benefit that must be declared. Forgetting this is costly when preparing T4 and Relevé 1 slips. In Quebec, it's more complicated: some benefits, such as employer-paid health insurance premiums, are taxable provincially but not federally. If you own and work for your business, review your benefits every fall, before the February rush. Bankeo will connect you with a certified accountant or CPA who is proficient in French payroll, free of charge.

Frequently asked questions

What exactly is a taxable benefit?

This is everything your company pays for your personal comfort rather than for work: a car you also use on weekends, parking, insurance, a large gift. The tax authorities consider this disguised salary: the value is added to your income and you pay tax on it, even if you never actually received the money.

Is group insurance a tax advantage?

It depends on the plan. Employer-paid premiums for a private health plan are not taxable federally, but they are taxable in Quebec, on the Relevé 1 (Quebec salary slip). Life insurance premiums paid by the employer, however, are taxable at both federal and provincial levels. Hence the importance of a properly configured payroll calculation.

How to avoid unpleasant surprises with taxable benefits?

Make a list of everything the company pays for you or your employees: vehicle, cell phone, insurance, gifts, parking. Each item has its own rules, and you may need to add GST and QST. Bankeo will connect you with a verified accountant or CPA who is an expert in French payroll, free of charge, and we'll continue to support you afterward.