GIF
Benefits

Taxable Benefits

Each employee benefit you offer may have direct implications on payroll remittances as well as tax calculations and reporting. Humi greatly simplifies and streamlines the processes involved  but it is also important to have a basic understanding of taxable benefits.

In short, a taxable benefit is a type of taxable employment income, which can be in forms such as insurance, allowance, direct payment, gift, or reimbursement for a personal expense. If a benefit is determined to be taxable, it must then be subject to statutory deductions such as income tax, CPP, and EI.

Two types of benefits

Non-cash taxable benefit

When an employer provides its employees a benefit that is not paid directly in cash but in forms such as third-party insurance, or services offered, the employer pays the cost directly to the third party. However, the value of the benefit is counted toward the employee’s taxable income and has to be recorded and reported as such.

Cash taxable benefit, allowance, expense

When an employer makes a reimbursement payment to employees for personal expenses, the reimbursement is included in the employee’s income as a taxable income. An example is gym membership. These benefits can be set up as Income Types in Humi Payroll.

A common error on payroll is when all benefits are set up as taxable but in reality they are considered non-taxable by the CRA. We listed the most common employer-provided benefits and the statutory deductions to assist in your benefit setup in Humi Payroll.

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Most Common Employer-Provided Benefit Pre- Tax Deduct CPP
(Pensionable)
Deduct EI
(Insurable)
Deduct Income Tax
(Taxable)
Life Insurance N Y N Y
Dependent Life N Y N Y
Accidental Death & Dismemberment N Y N Y
Critical Illness N Y N Y
Short Term Disability N N N N
Long Term Disability N N N N
Extended Health N N N N*
Dental N N N N*
Health Spending Account N N N N
Plan Admin/Subscription fee N N N N
RRSP Y Y N N

*Yes for Quebec

Additional Resources

CRA Employers Guide - Taxable Benefits and Allowances

Humi Help Centre: Group Benefits + Taxes