Be Aware Of Tax Changes For Employees - Part 2
As we discussed in our last issue of Breaking Tax and Investment News, with the end of the year now past us, it is worthwhile to review changes that have occurred during 2009 that may impact you or your clients at tax filing time.
Following are recent tax changes specific to those who are employed. It is important to review various tax provisions available to employees in this year of change, as the economic downturn has led to numerous job losses, especially in the automotive, media and manufacturing sectors.
Travel Within a Municipality or Metropolitan Area. Starting with tax year 2009, allowances paid for an employee to travel within the municipality or metropolitan area may be excluded from income if the allowance is paid primarily for the benefit of the employer.
Certain criteria must be met including that the vehicle is specifically designed or suited for the employer's business and essential for the performance of the employee's duties, and that there are legitimate business reasons why the employee must take the vehicle home at night.
Gifts and Awards. Effective for 2010, the CRA's policies regarding gifts and awards paid to employees will be as follows:
ï Non-cash gifts and non-cash awards to an arm's length employee, regardless of number, will be non-taxable to the extent that the total aggregate value of all non-cash gifts and awards to that employee for the year is less than $500.
ï In addition, a separate non-cash long service/anniversary award may also qualify for non-taxable status to the extent its total value is $500 or less.
ï For the purposes of applying the $500 thresholds, the annual gifts and awards threshold and the long service/anniversary awards threshold are separate.
Nominal Value Gifts. Items of an immaterial or nominal value, such as coffee, tea, T-shirts with employer logos, mugs, plaques, trophies, etc., will not be considered a taxable benefit to employees.
All of these amounts will already be included in Box 14 of the T4 slip, however, it's good to know about them as you negotiate your compensation from your employer.
Transit Passes. Effective for 2010, note the following for employees of transit companies (including bus, streetcar, subway, commuter trains or buses and ferry services):
ï Passes for the exclusive use of the employee will be tax-free.
ï Free or discounted passes for the use of the employee's family will be a taxable benefit.
Educational Resources: Now is a good time to look at retirement income plans, family succession and estate plans in an attempt to better understand financial needs for a future which could certainly include tax increases on both income and capital. To learn more consider the following Educational Resources available from The Knowledge Bureau:
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