Is employee parking taxable? It certainly can be! Canada Revenue Agency is always looking for ways to create revenue. And surprisingly this can be one of them – a Parking Perk.
In a tax case (Leslie Bernier v. Her Majesty the Queen)
an employee hired by the Government of Saskatchewan was provided initially with free parking in a specific parking stall. In 2003, the employee actually started paying $29.00 per month to the employer through a payroll
deduction. However, the Federal Government deemed that the fair value of the assigned parking stall was in fact was more like $88.00 per month, and assessed the employee $840.12 for 2002 and $703.28 for 2003.
The facts are a little unclear, but it would appear that the fact that the employee was provided with a reserved spot was a factor in determining the value of the 'employee benefit'
It is difficult to comprehend why the CRA (Canada Revenue Agency) would expend the effort to reassess for such small amounts, but this case does illustrate the length to which CRA is prepared to go.
CRA takes the position that employer-provided parking is usually a taxable benefit
, and as stated above they look at the fair market value, and you have to include any applicable GST/HST. There are some exceptions.
- Where the employee has a disability, the parking benefit is generally not considered a taxable benefit.
- Where the employer provides parking for business purposes and the employee has to use a vehicle regularly. Business purposes means where an employee is required to use a vehicle in the performance of a job such as travelling to off-site meetings or service calls regularly, which means at least three times a week on average. Travelling between home and work is specifically excluded.
- Scramble parking – there is no taxable benefit where there are significantly fewer parking spaces than there are employees, resulting in a first come first served utilization.
- Where a business is located within a shopping center or industrial park where parking is freely available to customers and employees alike.
With respect to recording the benefit if there is a deemed benefit, you will need to deduct Canada Pension Plan and Income tax, unless paid in cash, in which case you also need to deduct Employment Insurance.
- Bill Smyth CPA, FCGA, FCPA
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