Are group life and health insurance premiums taxable benefits?
Some premiums paid by the employer are taxable benefits. Consider for example:
life insurance;
life insurance for dependents;
accident insurance;
critical illness insurance.
In addition, amounts paid on your behalf are added to your taxable income.
It depends on health insurance premiums (drugs, vision care, dental care, and others). They are not taxable benefits outside Quebec, but in La Belle Province, they are. A portion of health insurance premiums may also qualify for a tax credit.
Are you entitled to a tax refund for your medical expenses?
Are group short-term or long-term disability plans taxable benefits?
Employer-paid short-term or long-term disability insurance premiums are not taxable benefits. However, benefits paid by your employer are. Conversely, if employees pay their premiums, disability benefits are tax-free. The same applies to individual insurance premiums. If you pay your premiums with money already taxed, the benefits will be tax-free.
Are non-group insurance contracts taxable benefits?
The premiums for a non-group* insurance contract paid by the employer are a taxable benefit. This is also the case for health, accident or disability insurance.
(*A non-group insurance contract is an individual contract for an employee.)
For example, an executive can negotiate individual health/wellness insurance payments. Their compensation package may even include private care coverage. The annual fees are then taxable.
Are taxable benefits for group pension and registered retirement savings plans (RRSPs)?
If your employer contributes on your behalf to a registered pension plan, the contributions are not taxable. But what if the employer contributes to your group RRSP or pays the same amount as you? This amount is a taxable gain that increases your employment income. However, here is a solution for those who have unused contribution room. You can use your employer’s contributions (and your own) to reduce the amount included in your income.
What if you tell your employer that you have contribution room? Depending on the available RRSP space, it could reduce the income tax it has to deduct from your pay.
The employer contribution to your pension plan or RRSP reduces your contribution room for the following year. This is called the “pension adjustment”, and you will see the amount on your T4 slip. Of course, income earned this year increases your contribution room. But no need to break your head to know how much you are. The CRA calculates your RRSP contribution room for the coming year. It indicates this on the notice of assessment that you receive each year after completing your tax return.
How do employee pension plans work?
Group RRSPs: why you should jump at the chance
If you need help evaluating your retirement savings options, an advisor will be happy to help. Find an advisor now.
Is the work phone a taxable benefit?
Companies sometimes provide their employees with a smartphone with a voice and data plan. However, the CRA does not consider the payments a taxable benefit if:
the cost of the package is reasonable;
personal use does not incur fees (e.g. additional long-distance charges) above the plan’s base rate.
Is equipment for working from home a taxable benefit?
In regular times, many companies offer the possibility of working from home full or part-time. Equipment and supplies provided by the employer are then not taxable benefits. But that was before working from home became the norm because of the pandemic.
Indeed, for the 2020 tax year, the CRA has implemented a temporarily fixed rate method. Eligible employees can claim $2 per day working from home due to COVID19. The maximum deduction is $400.
To establish your work-from-home expenses, the CRA recommends its calculator.
Read more – Tax: can you deduct the costs of teleworking caused by the pandemic?
Is tuition reimbursement a taxable benefit?
