travel allowance cra canada

CRA Mileage Rate 2024: Guide to Tax-Free Vehicle Allowances For Business Travel

Cra mileage rate 2024.

Are you an employee, small business owner, or self-employed individual looking to understand the rules and regulations of CRA mileage rate this 2024 ? Canadian taxpayers need to be aware of what they can expense on their taxes as entertainment, such as meals or kilometres travelled in a car.

We will discuss all relevant to ensure you maximize your deductions for businesses travelling while remaining compliant.

Key Takeaways

• 70¢ per kilometre for the first 5,000km driven
• 64¢ per kilometre after that
• 74¢ per kilometre for the first 5,000km driven
• 68¢ per kilometre after that

Changes to the CRA mileage rate for 2024

When reimbursing employees for business travel, the Canada Revenue Agency (CRA) has set out a specific set of rules that employers must adhere to. Canadian taxpayers should be aware of these rules when managing their business expenses to avoid any penalties from the CRA.

The 2024 standard CRA mileage rate per kilometre is currently 70 cents with a 4-cent per kilometre reduction after the first 5,000 kilometres driven yearly.

Here’s the CRA’s Automobile Allowance Rates for the past five years:

You can report any tax-subjected automobile allowances paid to employees or officers on Form T2200 Declaration of Conditions of Employment .

Employers can claim input tax credits based on reimbursements made for these expense claims but must ensure they keep detailed records alongside invoices related to any incurred costs.

Businesses must recognize reimbursement requirements, as failure to comply could result in CRA-implemented fines and other financial penalties, which will financially affect both employers and their staff.

What is CRA mileage allowance and tax-free vehicle allowance in Canada?

The CRA mileage rates are a guide set by the Canada Revenue Agency to reimburse taxpayers for vehicle expenses incurred for business use. They calculate the deductible expenses related to operating a vehicle for business, medical, moving, or charitable purposes. Taxpayers can use these rates to calculate their deductible vehicle expenses when filing their income tax returns.

How to use the 2024 CRA mileage rate and automobile allowance: Salaried workers, Self-employed, and Employers

Mileage reimbursement rules for salaried workers.

Employees may be eligible to claim allowable motor vehicle expenses on their income tax return if they incurred these expenses under the terms of their employment contract. For instance, if an employer agrees to reimburse travel expenses for using one’s personal vehicle for work-related tasks.

However, it’s essential for employees to maintain accurate records and evidence to substantiate that the kilometers claimed were indeed for business purposes.

Mileage Reimbursement Rules for Self-employed

Self-employees can also deduct business-related vehicle expenses. This also applies to personal cars used for business purposes such as purchasing supplies for your businesses, meeting with clients, attending conferences, or visiting customers. Other expenses may also include:

• License and registration fees
• Fuel and oil expenses
• Insurance fees
• Maintenance and repairs expenses
• Leasing costs
• Capital cost allowance

The allowance will be deducted in the annual tax returns. But remember, self-employees must keep receipts and invoices in order to get deductions. Expenses incurred for personal use of their personal vehicle will not be eligible for coverage under the allowance.

Mileage Reimbursement Rules for Employers

There is no law mandating that employers must compensate employees for using their personal vehicles for business purposes – this depends on individual company policies or contracts.

Nevertheless, implementing a mileage allowance using Canada Revenue Agency (CRA) standards can make a job offer more attractive to potential employees, as it compensates for their personal vehicle usage.

With a CRA mileage allowance, employers are obliged to cover employees’ work-related vehicle expenses. This reimbursement also provides a tax benefit for the company. To qualify as legitimate and tax-deductible, the reimbursement should:

• Cover the yearly amount of kilometres driven solely for business purposes
• Be based on a reasonable per-kilometre rate or slightly lower than the official CRA vehicle allowance rates
• Be for the employee who hasn’t already been reimbursed for the same use of their vehicle.

If these conditions are met, the mileage reimbursement is considered a non-taxable benefit for employees.

Eligibility For CRA Mileage Rate 2024 And Tax-Free Vehicle Allowances

The CRA provides rules and regulations for claiming tax-free vehicle allowances and mileage rates when travelling for business purposes.

You are also eligible if you use your car to attend conventions, seminars or meetings, and other activities with work-related purposes away from home. But travelling from your home to your normal place of work is not considered business-related driving.

The type of transportation used is essential—employees using public transport, such as buses and subways, do not qualify for any reimbursements. At the same time, those who choose personal cars will receive a predetermined per-kilometre rate (according to the CRA standard mileage rate as shown above).

4 Types Of Business Travel Eligible For CRA Mileage Rates And Tax-Free Vehicle Allowances

• Regular Work Locations
• Temporary Work Locations
• Home Office as a Regular Work Location
• Commuting to Work

Whether travelling for regular work locations, temporary work locations, home office or commuting to work, you’ll find everything you need to know about the CRA mileage rates and tax-free vehicle allowances here.

Canada Revenue Agency (CRA) defines regular work location as any workplace that the employee visits at least once a week on a sustained basis for a purpose related to their employment.

It includes both long-term and short-term job positions or assignments. The employer must be able to provide sufficient proof of attendance; records such as timesheets should help demonstrate this.

In addition, travel expenses associated with these locations are only eligible for reimbursement if they are located more than 80 km (one way) from the primary place of business or residence of the employee.

For example, an accountant who works in Toronto but travels to Ottawa each weekend would likely qualify for CRA mileage rate reimbursements since it’s more than 160 km one way between cities—even if he has not been assigned there permanently yet.

Any work location other than an employee’s regular place of employment is considered a “temporary” work location and would be eligible for mileage rate and tax-free vehicle allowances.

According to CRA guidelines, temporary locations last up to four weeks or have been pre-approved by the employer in writing. Considering all surrounding circumstances, the employer must demonstrate why the travel was reasonable.

Any expenses related to this travel, such as lodging, meals, allowance and specific motor vehicle rates, can be deducted from income if proven to be necessary business or relocation expenses incurred during that journey.

• Home Office As A Regular Work Location

Home offices may qualify for either CRA mileage reimbursement or tax-free vehicle allowance when it is determined to be a regular work location.

To qualify as a regular work location, the home office must be used for working with clients or customers more than 50% of the time each month and must meet specific criteria, such as having private entrances, separate telephone lines and an exclusive portion of the residence dedicated solely for business activities.

• Commuting To Work

Commuting expenses incurred while travelling to and from work regularly are usually not eligible for mileage rate or tax-free vehicle allowance benefits under the CRA.

However, Canadian taxpayers can claim certain commuting expenses for business activities associated with their job or profession that require them to travel and attend industry events or other such engagements away from their workplace.

To be eligible, the primary purpose of this travel must be generating income by performing duties related to your job/profession rather than commuting between home and work.

LEARN MORE: How to Find the Best Tax Accountant Near Me

Mileage Reimbursement Implications

Tax implications.

In Canada, tax deductions are available to businesses for business travel expenses, including mileage and car allowances. Mileage allowance paid to employees or officers is treated as a taxable benefit subject to the employer’s income tax withholding at source.

If an employee is provided with the use of a company car, this will be presented as part of their salary, and taxes will be deducted accordingly. For employers, eligible expenditure on providing car allowances to employees may also qualify for input tax credits if applicable according to prevailing rules in each province or territory.

Accurate tracking and record-keeping are essential when claiming CRA mileage rates and tax-free vehicle allowances for business travel. Recent changes have been implemented regarding the supporting documentation that employers must keep to claim certain deductions from their business’s income taxes relating to these types of expenses (e.g., a detailed log that includes the date of travel, route taken, and distance travelled).

If you need clarification about the tax implications, you can always consult a tax accountant who can help you with personal and corporate tax matters.

External Influences

• Economic Conditions : Rates might be adjusted to align with prevailing economic conditions.
• Cost of Fuel: Fluctuations in fuel prices may cause the allowance rate to increase or decrease.
• Inflation Rates: General inflation can affect the cost of vehicle maintenance, repairs, insurance, and other related expenses. CRA might adjust the mileage allowance accordingly.
• Policy Changes: Any new regulations regarding business expenses and reimbursements might necessitate changes to the allowance.
• Technological Advancements: The increase in electric and hybrid vehicles can affect the per-kilometre cost calculation regarding vehicle expenses, which could potentially impact the CRA mileage allowance.

3 Tips For Managing Business Travel Expenses and Mileage Tracking

– Provide clear guidelines for employees to follow when tracking and recording business travel expenses, such as keeping detailed records and utilizing technology.

1. Keep Detailed Records

Keeping detailed records of business travel expenses is essential for Canadian taxpayers. It helps to accurately calculate CRA mileage rates and tax-free vehicle allowances and avoid potential issues during an audit from the Canada Revenue Agency (CRA). Taxpayers need to keep records such as:

• Gas receipts

• Oil changes

• Car maintenance & repair costs

• Insurance payments

• Any other related out-of-pocket expenses

By keeping these mileage records, Canadian taxpayers can easily track their business travel expenses and ensure everything is accounted for correctly. Further, it provides evidence that any vehicle deductions are legitimate, so there are no problems or additional costs associated with CRA audits. Technology can also help Canadians monitor their spending by using various automatic mileage tracking tools, such as Driversnote’s expense reimbursement system and tracking tool – perfect for managing business trips abroad or just around town!

2. Use Technology To Track Vehicle Expenses

Technology can be a valuable tool for managing business travel expenses associated with CRA mileage rates and tax-free vehicle allowances. Mileage tracking apps and other tools can enable accurate record-keeping and precise calculations, which can help taxpayers claim total tax deductions. Keeping a detailed log of trips is still necessary, but using technology reduces the need for manual tracking of odometer readings while adding convenience.

Examples of mileage tracking apps include TripLog , MileIQ , QuickBooks Self Employed , etc. Additionally, businesses may install GPS units on employee vehicles to keep track of automobile-related expenses for various purposes, including deduction claims at year-end taxes or providing client billing information when required.

Using these apps or tools can make managing business travel expenses in different locations within Canada easier by automatically tracking all drives based on time spent driving as per kilometre rate set by the CRA standard mileage allowance (SMA). It saves time to manually enter odometer readings every time an individual travels between two points, ensuring that no detail remains unaccounted during tax filing or claiming expenditures from bosses/employers, respectively.

DISCOVER: Free Resources

3. Reimburse Employees Promptly

Employers must ensure that employees are reimbursed promptly and accurately for travel expenses on business trips to avoid any potential complications or legal ramifications.

Promptly reimbursing employees helps maintain employee morale and makes them feel empowered and valued, primarily if the employer guides them in navigating the expense system. Hence, they know exactly what to do when their reimbursements will be delivered and why it’s crucial.

According to Canadian tax laws, employers who provide an automobile allowance must maintain documents clearly outlining this arrangement and documenting all claims made by employees against it via an expense reimbursement form.

Furthermore, failure to automate the process in some way may lead to delays with repayment — another aspect that should be addressed in such arrangements.

• Understanding Provincial/Territorial Allowances and Mileage Rates in Canada

Canadian taxpayers are responsible for understanding the differences between federal and provincial/territorial allowances when claiming expenses related to business travel.

The CRA has a standard mileage rate of $0.70 per kilometre for the first 5,000 kilometres driven each year; however, some provinces or territories might have additional tax-free vehicle allowance amounts based on their accommodations, cost of living or other particular circumstances that could increase the amount an individual can claim up from CRA’s base rate.

CRA Mileage Rate 2024 Conclusion

As business travel can be complicated and expensive, understanding the CRA mileage rates and tax-free vehicle allowances is essential. Following the rules prescribed by the Canada Revenue Agency (CRA) can save time, money, and energy when preparing your taxes.

The key takeaway from this article is to keep records of all your travels—including destinations, distances travelled, and dates—and submit accurate expense reports for CRA mileage reimbursement or claim for a business vehicle allowance as per eligible criteria as soon as possible.

Common questions related to CRA Mileage Rates this 2024 And Tax-Free Vehicle Allowances For Business Travel relate to eligibility criteria for claiming deductions on taxes relating to business trips; applicability of different rates in various provinces/territories; use of technology tools for tracking expenses; etc., all of which have been addressed throughout this article.

It’s also essential to remember that expenses must adhere to guidelines set forth by the Canada Revenue Agency’s prescriptions for deductions to apply on personal income tax filings.

1. What are the CRA mileage rates for business travel?

The Canada Revenue Agency (CRA) sets a mileage rate for business travel for automobile and bicycle use. Currently, the kilometric rate is set at $0.70/km (2024)for taxis, cars or vans leased or owned by employees.

2. How do you calculate vehicle allowances provided by employers through CRA?

To calculate vehicle allowance amounts provided by employers using the CRA mileage rate, multiply an employee’s total business kilometres driven during a given tax year with the corresponding kilometric rate of ($0.70 per km 2024 for the first 5,000km and $0.64 thereafter). This amount should be included in Box 14 on their T4 slip from the employer to declare it as income when filing taxes every year unless the allowance meets certain criteria and is considered “reasonable.”

3 . Are car expenses covered under my prescribed mileage rates allowance?

Yes – once you met CRA’s conditions, reimbursed car expenses such as insurance costs and eligible lease payments are intended to be covered by your prescribed mileage rates allowance according to CRA guidelines.

Are you looking for assistance with your personal or corporate taxes? Look no further than CPA Guide. Our network of top accountants and accounting firms in Canada will help you find the best CPA to suit your needs. Get started today with CPA Guide .

Taxpayer finds himself on wrong side of CRA when claiming employee expenses

Jamie Golombek: Changes to how travel allowance was calculated and paid trip up B.C. boilermaker

You can save this article by registering for free here . Or sign-in if you have an account.

Reviews and recommendations are unbiased and products are independently selected. Postmedia may earn an affiliate commission from purchases made through links on this page.

Article content

If you’re required to use your own vehicle for work, perhaps to visit clients or for other work reasons, most employers will reimburse you based on a per-kilometre basis and, provided the reimbursement is reasonable, it need not be included in your income for tax purposes.

Taxpayer finds himself on wrong side of CRA when claiming employee expenses Back to video

But a recent case shows what can happen when an employer provides its employees with an allowance that’s not entirely based on the actual kilometres the employee has driven.

Subscribe now to read the latest news in your city and across Canada.

• Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman, and others.
• Daily content from Financial Times, the world's leading global business publication.
• Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.
• National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.
• Daily puzzles, including the New York Times Crossword.
• Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman and others.

Create an account or sign in to continue with your reading experience.

• Access articles from across Canada with one account.
• Share your thoughts and join the conversation in the comments.
• Enjoy additional articles per month.
• Get email updates from your favourite authors.

Sign In or Create an Account

Before delving into this latest employment expense case , let’s review the general rules for deducting automobile expenses. If you’re an employee who needs to use your car for work, you must meet certain conditions in order to deduct some of your automobile expenses on your tax return.

CRA conditions

Bmo zag fund. solidly dependable., bmo fixed income funds. designed with flexibility., gain more control over the yield curve., give fixed income a bigger role..

First, you must normally be required to work away from your employer’s place of business or in different places. Second, under your contract of employment, you must be required to pay your own automobile expenses, and this must be certified by your employer on a signed copy of CRA Form T2200, Declaration of Conditions of Employment.

Finally, you must not be the recipient of a “non-taxable” allowance for motor vehicle expenses. An allowance is considered to be non-taxable when it is solely based on a “reasonable” per-kilometre rate. For 2023, the Canada Revenue Agency considers a reasonable rate to be 68 cents per kilometre for the first 5,000 kilometres driven, and 62 cents/km after that. In the territories, the rate is four cents/km higher.

If your employer reimburses you, but you feel the amount was not reasonable to cover the actual operating costs of your vehicle, you can deduct the employment portion of your vehicle operating expenses provided you include the employer vehicle allowance you received in your income.

Get the latest headlines, breaking news and columns.

• There was an error, please provide a valid email address.

By signing up you consent to receive the above newsletter from Postmedia Network Inc.

A welcome email is on its way. If you don't see it, please check your junk folder.

The next issue of Top Stories will soon be in your inbox.

We encountered an issue signing you up. Please try again

Travel expenses taxable?

This most recent case involved a Kelowna, B.C. taxpayer who has worked as a boilermaker for more than 30 years. The terms of his employment are governed by a collective agreement between his union and the Boilermaker Contractors’ Association of British Columbia, an umbrella association of member companies who together are the taxpayer’s “employer.”

The taxpayer said his union hall typically calls him at his home to let him know what and where his next job is, and most of his jobs require him to drive from Kelowna to other locations. In the years under review, the taxpayer travelled to jobs in various parts of B.C., such as Port Alice, Fort Nelson, Trail, Kamloops, Castlegar, Quesnel and Crofton, as well as Edmonton, among other locations.

The issue in the case was whether the travel allowances received by the taxpayer of $4,006 in 2014 and $6,590 in 2015 were taxable, and whether any amount of his motor vehicle expenses was deductible from his employment income in those years.

The issue arose because in 2014 and 2015, the collective agreement changed the way travel allowances were calculated and paid to employees. The process for reimbursing employees for travel was streamlined by eliminating the need for receipts and using a single location as a common starting point for calculating the per-kilometre reimbursement for all work-related trips. The changes also ended up affecting the employees’ tax treatment.

In the previous collective agreement, the taxpayer’s employer paid him his hourly rate for travel time, plus full airfare and transportation costs to his hotel.  Under the new collective agreement, which governed the tax years under review, the employer reimbursed the taxpayer for use of his motor vehicle by paying a travel allowance calculated using the CRA’s annual per-kilometre vehicle rate , measured using Burnaby City Hall as a common starting place for all workers, regardless of whether a person actually set out from there (which the taxpayer typically did not). There was no additional payment or reimbursement for travel time or expenses incurred, subject to specific exceptions for expenses such as ferries, tolls, taxis and airfare.

The taxpayer testified he didn’t have to submit receipts for travel under this regime, and would automatically receive the allowance if he was dispatched to an out-of-town worksite. He said this new method of calculating the allowance sometimes paid him less than it actually cost him to travel, and sometimes it paid him more, so it “likely averaged out” at the end of the year. He also recalled that under the previous collective agreement, his travel reimbursements were never subject to tax.

During the CRA audit, the taxpayer provided copies of forms T2200 for 2014 and 2015, dutifully signed by one of the companies he did a significant amount of work for in those years. On the form, the employer confirmed the taxpayer was required to pay expenses for which he did not receive an allowance or reimbursement and confirmed it did pay the travel allowances under review by the CRA.

The judge reviewed the facts and the legislation. Put simply, the legislation states that an allowance for motor vehicle expenses must be “wholly reasonable” in order to be excluded from employment income. Allowances that are unreasonable must be included in income in their entirety, as the taxpayer has no discretion to carve out a reasonable portion from the rest. As a result, if a car allowance is considered unreasonable and must therefore be included in the taxpayer’s income, the taxpayer can deduct their actual motor vehicle expenses from their income.

The judge ruled that since Burnaby City Hall is “an arbitrary starting point,” the allowance was not solely based on the number of kilometres driven by the taxpayer, and was therefore not reasonable and needed to be included in income.

As for the possible deduction of the taxpayer’s actual motor vehicle expenses, this matter was left unclear. Since the collective agreement allows the taxpayer (and other boilermakers) to live and base themselves in or outside B.C.’s Lower Mainland, the judge queried whether travel from one’s home to the out-of-town locations is personal versus work-related.

Nevertheless, without the taxpayer providing his actual expenses, the judge was not willing to allow the taxpayer to simply deduct expenses equivalent to the amount of the taxable allowances.

A most unfortunate result for the taxpayer.

Jamie Golombek, CPA, CA, CFP, CLU, TEP, is the managing director, Tax & Estate Planning with CIBC Private Wealth in Toronto. [email protected] .

_____________________________________________________________

If you liked this story, sign up for more in the FP Investor newsletter.

Postmedia is committed to maintaining a lively but civil forum for discussion. Please keep comments relevant and respectful. Comments may take up to an hour to appear on the site. You will receive an email if there is a reply to your comment, an update to a thread you follow or if a user you follow comments. Visit our Community Guidelines for more information.

Mortgage and real estate industry hit the jackpot this week with trio of announcements

Posthaste: bank of canada can go bigger on rate cuts as fed 'blows the door wide open', trans mountain pipeline has the tanks at cushing, oklahoma running dry, interest rate cuts mean time has come to buy discount bank stocks, says cibc, howard levitt: ontario case shows that sometimes the best lawyer is no lawyer at all.

This website uses cookies to personalize your content (including ads), and allows us to analyze our traffic. Read more about cookies here . By continuing to use our site, you agree to our Terms of Service and Privacy Policy .

You've reached the 20 article limit.

You can manage saved articles in your account.

and save up to 100 articles!

Looks like you've reached your saved article limit!

You can manage your saved articles in your account and clicking the X located at the bottom right of the article.

• @achenhenderson >
• /AchenHenderson >

What is the 2024 CRA per-kilometer Allowance Rates?

2024 cra per-kilometer allowance rates.

The Canada Revenue Agency (CRA) has adjusted the per-kilometer rates for vehicle allowances, varying by year and location. Here’s a breakdown of the recent revisions:

2024 Automobile Allowance Rates:

– $0.70 per kilometer for the initial 5,000 kilometers.

– $0.64 per kilometer beyond the first 5,000 kilometers.

– In the Northwest Territories, Yukon, and Nunavut, an additional 4 cents per kilometer is permitted for travel.

2023 Automobile Allowance Rates:

– $0.68 per kilometer for the first 5,000 kilometers.

– $0.62 per kilometer after the initial 5,000 kilometers.

– Additional allowance of 4 cents per kilometer for travel in the Northwest Territories, Yukon, and Nunavut.

2022 Automobile Allowance Rates:

– $0.61 per kilometer for the initial 5,000 kilometers.

– $0.55 per kilometer beyond the first 5,000 kilometers.

– An extra 4 cents per kilometer was allowed for travel in the Northwest Territories, Yukon, and Nunavut.

How to Manage Automobile Interest and Operating Costs?

Aside from capital or leasing expenses, vehicles entail additional costs that can be expensed within the company. These include fuel or electricity, insurance, repairs, maintenance, interest (subject to CRA limits), and license and registration fees. Such expenses are typically fully expensed in the corporation where the vehicle is owned or leased, with proper record-keeping required to support the claims.

How to Maintain Records?

To substantiate deductions, individuals or companies must maintain records of total kilometers driven and those driven for business purposes. This can be achieved through a logbook for each business-used vehicle, documenting the date, destination, purpose, and kilometers driven for each trip. Additionally, odometer readings at the fiscal period’s start and end, or upon vehicle changes, must be recorded. Employees and owners may be eligible for a simplified logbook method .

How to Utilize Technology?

Various apps are available to assist with logbook maintenance, such as MileIQ and MileBug , which can export data for accounting purposes. For automobile allowance recipients, maintaining a logbook is sufficient. However, companies or vehicle owners must retain all receipts and invoices for vehicle-related expenses, ensuring they detail the date, amount, expense type, and vendor name.

If you want to discover more insights about  How to Claim Motor Vehicle Expenses for Your Business in Canada ,  click here.

At  Achen Henderson , we help entrepreneurs and business leaders build great companies. Do you have questions about how we can help you pay less tax in your corporation? Get in touch today!

Share this article

Join our community today.

Sign up for the “Your Business Unleashed” newsletter.

A Historical Overview of CRA Mileage Rates

Understanding the evolution of Canada's auto allowance rate, and how to use it for yourself

In this guide we will dive deep into the historical journey of the CRA Mileage Rates. Understanding the intricate details of these rates is crucial for businesses and individuals alike. So let’s get right to it. We’ll cover the following:

• Understanding the CRA Automobile Allowance Rate

CRA Mileage Rate History

Fixed automobile allowance rate, variable automobile allowance rate.

• Factors influencing Canadian federal mileage rates
• How to calculate your CRA Automobile Allowance

Understanding the CRA Mileage Rates

Before we delve into the historical aspects, let's ensure we have a clear understanding of what exactly the CRA Mileage Rates are. In simple terms, these rates determine the amount of money you can claim as a deduction for the business use of your vehicle. It's like a roadmap that guides you in navigating the complex terrain of tax deductions.

When it comes to the CRA Mileage Rates, it's essential to recognize that they play a crucial role in not only simplifying your tax filing process but also in optimizing your financial management strategies. By leveraging these rates effectively, you can gain a competitive edge in managing your business expenses and enhancing your overall tax efficiency.

What’s the Automobile Allowance Rate?

The CRA Mileage Rates, also known as the Automobile Allowance Rates, consist of two components: the fixed rate and the variable rate. The fixed-rate represents the cost of owning and operating a vehicle, such as insurance and depreciation. On the other hand, the variable rate reflects the fuel and maintenance costs incurred during your business travels.

Moreover, it's worth noting that the CRA Mileage Rates are updated annually to align with the current economic landscape and reflect the changing costs associated with vehicle ownership and operation. Staying informed about these updates is key to ensuring that you are accurately calculating your deductions and maximizing your tax benefits.

Importance of CRA Mileage Rates

Understanding the importance of these rates is akin to comprehending the significance of having a reliable compass. The CRA Mileage Rates directly impact your bottom line, enabling you to accurately calculate your business expenses and maximize your potential tax deductions. By adhering to these rates, you can steer clear of any navigational pitfalls and maintain compliance with CRA regulations.

Furthermore, by incorporating the CRA Mileage Rates into your financial planning and reporting processes, you can enhance the transparency and accuracy of your business operations. This not only fosters trust and credibility with stakeholders but also positions your business for long-term success and sustainability in a competitive market environment.

Fixed and Variable Rates Table

As we mentioned, the fixed rate represents the cost of owning and operating a vehicle, such as insurance and depreciation. When the CRA issues rates, the fixed rate applies to the first 5,000 kilometres driven.

Once you hit 5,001 kilometres, the variable rate kicks in. The variable rate is there to reflect the fuel and maintenance costs incurred during your business travels.

It’s also worth noting that in the Northwest Territories, Yukon, and Nunavut, there is an additional 4¢ per kilometre allowed for travel, due to the higher cost of operating vehicles in those areas. 

Factors Influencing CRA Mileage Rates

Now, let's delve into the factors that influence the CRA Mileage Rates, helping us understand the tapestry of variables that shape these rates.

When we explore the intricate web of influences on CRA Mileage Rates, it becomes apparent that economic factors are a cornerstone in their determination. The ebb and flow of the tides in the economy, such as fluctuations in fuel prices, inflation rates, and overall economic conditions, play a crucial role in guiding the direction of these rates. It's akin to deciphering a complex puzzle where global markets and their movements intricately sway the very fabric of our mileage rates.

Economic Factors

Just like the ebb and flow of the tides, economic factors play a crucial role in determining the CRA Mileage Rates. Fluctuations in fuel prices, inflation rates, and overall economic conditions guide the direction of these rates. It's like understanding the delicate dance between global markets and how they sway the very fabric of our mileage rates.

Moreover, policy changes act as the catalysts that ignite the engine behind the CRA Mileage Rates. Alterations in taxation legislation, environmental regulations, and government initiatives cast a transformative light on these rates. Like a shifting wind, policy changes can set us on a new course, reshaping the way we calculate our deductions.

Policy Changes

Policy changes act as the catalysts that ignite the engine behind the CRA Mileage Rates. Alterations in taxation legislation, environmental regulations, and government initiatives cast a transformative light on these rates. Like a shifting wind, policy changes can set us on a new course, reshaping the way we calculate our deductions.

Furthermore, technological advancements also play a significant role in influencing CRA Mileage Rates. The evolution of electric vehicles, autonomous driving technologies, and the rise of ride-sharing services have introduced new dynamics into the calculation of mileage rates. These advancements not only impact the rates themselves but also raise questions about the future of transportation and its implications on tax deductions.

How to Calculate CRA Mileage Rates

Calculating CRA Mileage Rates involves a detailed understanding of the methodical process that ensures you are on the right financial track. By following these steps diligently, you can navigate the complexities of business expenses with confidence and precision.

Basic Calculation Method

At its core, the basic calculation is like a compass pointing you in the right direction. You multiply the total kilometers driven for business purposes by the applicable mileage rate for your vehicle. This reliable method ensures that you stay on track and avoid any detours in your deduction calculations.

Understanding the basic calculation method is crucial for laying a solid foundation in your journey towards accurate CRA Mileage Rate calculations. It serves as the cornerstone upon which you can build more intricate deduction strategies as you delve deeper into the realm of business expenses.

Advanced Calculation Techniques

For the more adventurous souls looking for precision and finesse, advanced calculation techniques open up a world of possibilities. By recording detailed information about your vehicle expenses such as fuel costs, maintenance, and repairs, you can fine-tune your deduction calculations. Think of it as upgrading your basic compass to a sophisticated GPS system, guiding you through the intricacies of your deductions with utmost accuracy.

Embracing advanced calculation techniques not only enhances the accuracy of your CRA Mileage Rate calculations but also provides a deeper insight into the financial dynamics of your business operations. It allows you to navigate through the twists and turns of deductible expenses with a level of sophistication that sets you apart as a meticulous financial navigator.

Browse the business mileage hub

Business mileage hub home, self-employed mileage guide, employee mileage guide, mileage reimbursement and rates guide for employers, irs mileage rate 2024 | current rates, rules, calculations, and more, irs mileage log requirements, automatic mileage and expense tracking.

Learn more on our Blog

150 inspirational quotes for entrepreneurs.

Explore 150 motivational quotes to fuel your entrepreneurial journey. Find inspiration on topics like strategy, perseverance, innovation, and teamwork. Perfect for any business leader looking to stay motivated and driven.

Top 11 Best Gas Mileage Cars for 2024

Discover the top 11 fuel-efficient cars of 2024 that offer exceptional gas mileage, combining eco-friendliness with affordability and advanced features.

Top Dasher Requirements—Everything You Need to Know About DoorDash’s Reward Program

Learn everything about DoorDash's Top Dasher requirements and how to enjoy exclusive benefits and maximize your earnings with Everlance

Get Started

National Joint Council

• Gen Sec Annual Report - 2022-23
• NJC Labour Relations Training Sessions for the LR Community
• NJC Recognition
• Photo Gallery
• Current Committee Activities
• NJC Constitution
• NJC By-Laws
• NJC Co-Development Process
• NJC Results for Employees
• Organization Chart
• NJC Membership
• NJC Statement of Values
• Disability Insurance Plan
• Public Service Dental Care Plan
• Public Service Health Care Plan
• Coordinators
• Search Decisions
• Information Notice - Change in Grievance Practice
• Grievance Process and Procedures
• Publications
• NJC Communiqués

Rates & Allowances

Virtually all employees are directly affected at one time or another by National Joint Council rates and allowances.  Anyone who travels on government business or who has relocated to take a new job knows the importance of various entitlements established under NJC directives. For some employees, NJC rates and allowances represent a very substantial component of overall compensation.  For employees who serve outside Canada or at isolated posts within Canada, these benefits address unique attributes of the communities where they work or provide reimbursement for high costs and special expenses.

The Guide to National Joint Council Rates and Allowances  provides employees and managers with a brief description of each rate or allowance, how it is determined or calculated, as well as the process used to review and modify the rate or allowance from time to time.

• Guide to NJC Rates and Allowances

Commuting Assistance Directive

• Appendix A, Lower Kilometric Rates

Foreign Service Directives

• FSD Rates & Allowances
• Kilometric Rates
• Schedules to FSDs and Meal Rates

Isolated Posts and Government Housing Directive

• Vacation Travel Assistance
• Lower Kilometric Rates

Travel Directive

• Appendix B, Kilometric Rates
• Appendix C, Meal Allowances, Canada and USA
• Appendix D, Meal Allowances, International
• Report on the Travel Directive, Appendix D - 2015-6
• Guide to Exchange Rate Calculator
• Methodology for Converting Foreign Travel Expenses
• 2024 Annual Report
• February 2024
• August 2023
• CFS & PHH Reports - 1999 to 2023

What’s new for travel deductions for northern residents?

March 1, 2022.

Do you live in a northern part of Canada? Northern residents have some good news for their 2021 tax returns! Travel deductions have been expanded so more residents can claim their expenses for trips to and from northern regions. Keep reading to learn more about the updated deductions for northern residents.

What are deductions for northern residents?

What’s new for the travel benefits deduction, what do i need to claim this deduction, what’s a designated city, how do i know if i live in a prescribed zone, what if i recently moved to a prescribed zone.

If you lived in the northern regions of Canada for at least 6 consecutive months , you might be able to claim a residency deduction and/or a deduction for travel benefits on your return. These deductions are designed to help offset the additional costs of living in a remote area by lowering the amount of taxes you owe.

You can claim these deductions on your return using the northern residents deduction (T2222) form . If you're a Québec resident, you can also claim the related provincial deductions with form TP-350.1-V . To learn more about northern residents deductions, visit the H&R Block Online Help Centre .

In previous years, you could only claim the travel benefits deduction (or travel deduction, if you’re a Québec resident) if you worked in a prescribed zone and paid for trips outside of your region for which you received a taxable travel allowance from your employer. Now, you can claim a deduction for personal trips on your 2021 return, even if you’re not employed.

If you or someone in your household travelled within Canada during the year, you can claim the cost of up to 2 trips for each family member . If you travelled for medical reasons, there’s no limit on the number of trips you can claim.

The amount you can claim is the lowest of the following amounts:

• The cost of your trip (including what you paid for transportation and accommodations)
• The lowest return airfare to the closest designated city when you took your trip
• Up to $1200 per family member

Keep in mind, if you received a taxable travel allowance from your employer, you can still claim your taxable travel benefits like last year. Visit the H&R Block Online Help Centre to learn more about claiming taxable travel benefits.

Note: If you get a non-taxable travel allowance or any other non-taxable travel assistance from your employer, you can’t claim the travel benefits deduction on your return.

You’ll claim this deduction when you prepare and file the northern residents deduction (T2222) form with your 2021 return. You’ll need:

• The date your trip began (to calculate the lowest return airfare between where you travelled and a designated city)
• Receipts for your transportation (for example, air, train, bus fare or vehicle expenses)
• Receipts for your accommodations (for example, the cost of your motel or hotel)

If you don’t have your receipts, there’s a simplified method you can use to calculate your meal and vehicle expenses, but there is no simplified method for other expenses.

If you chose to go with the simplified method to claim your meals, you can claim $22 per meal for up to three meals a day (tax included). When it comes to claiming your vehicle expenses, you can claim a per-kilometer rate for how far you traveled. Keep in mind, the rate you can claim will depend on which province and territory you started your travel from. Even though you don’t have to hold onto your receipts, you should still hang onto documentation that can support your claim(s).

​​A designated city is the city closest to where you live. You can’t claim more than the cost of the lowest return airfare to that city on the day you took your trip (even though you may not have travelled to that city or even travelled by air). The designated cities are:

• Vancouver, BC
• Calgary, AB
• Edmonton, AB
• Saskatoon, SK
• Winnipeg, MB
• North Bay, ON
• Toronto, ON
• Montréal, QC
• Moncton, NB
• Halifax, NS
• St. John's, NL

For all northern residents deductions, where you live determines how much you can claim. For example, you can claim the deduction amounts in full if you live in a prescribed northern zone (Zone A) . If you live in a prescribed intermediate zone (Zone B) , you’re only eligible for half of the deduction amounts.

To find out if you live in a prescribed zone, check the following list from the CRA and Revenu Québec:

• Northern zone (Zone A)
• Intermediate zone (Zone B)
• Northern zone (Zone A) – Québec only
• Intermediate zone (Zone B) – Québec only

If you recently moved but haven’t lived in a prescribed zone for at least 6 months, you can file your 2021 return without claiming your deductions. Once you qualify, you can request to change your return and claim your deductions retroactively. If you filed your return using H&R Block’s Do It Yourself tax software , adjusting your return is even easier with our ReFILE feature .

Ready to file? H&R Block makes sure you get the maximum refund*. Get help from the largest network of reliable Tax Experts by choosing one of four convenient ways to file: File in an Office , Drop-off at an Office , Remote Tax Expert , or Do It Yourself Tax Software .

Share this article

Related articles, the 3 best tax tips to help you prepare for this tax season., january 4, 2022, weirdest things canadians have tried to claim on their taxes., december 12, 2018, can i claim this top tax myths debunked., may 28, 2021, can you claim the canada caregiver amount, may 17, 2021, subscribe to our tax tips newsletter..

Get the latest tax news to your email.

Don’t fill this out if you’re human:

By clicking the Subscribe button, you consent to receiving electronic messages from H&R Block Canada regarding product offerings, tax tips, and promotional materials. You can withdraw your consent at any time by emailing us at [email protected]

Form T2200, Declaration of Conditions of Employment , must be completed by the employer in order for the employee to claim these expenses.

The employee claims the expenses on Form T777 Statement of Employment Expenses .

In order to deduct vehicle expenses on Form T777, the employee must

This is the only method allowed for an employee to claim vehicle expenses - they cannot simply use a rate per kilometre x kilometres driven for work.

Line 22900 employment expenses can be entered in the "other deductions" line of the Canadian Tax and RRSP Savings Calculator .

This topic is discussed in the Life in the Tax Lane October 2019 video , referencing Tax Court case MacDonald v. The Queen, 2019 TCC 169 re vehicle expenses denied.

Travel To and From Work

Travel to and from the place of work is not considered use for employment.  When the form is completed, the kilometres used for earning employment income is entered, as well as the total kilometres driven in the year .

GST/HST Refund

The motor vehicle expenses will include any GST/HST or provincial sales taxes incurred.  You may be eligible for a refund of the GST/HST included in the costs.  See Employee and Partner GST/HST rebate on the GST/HST page.

Working From Home Travel Expenses

If an employee normally works in their home office, does not have an office at the employer's place of business but occasionally must travel there, the travel to and from the employer's place of business may qualify for a vehicle expense deduction, or may receive a tax-free reasonable travel allowance from their employer for this travel.

Working from Home during COVID

Tax Court of Canada case Gardner v. The Queen 2020 TCC 108 decided the expenses claimed by the taxpayer for travel between her home office and her employer's office in 2015 were deductible as an employment expense as per s. 8(1)(h.1)(ii) of the Income Tax Act.  The T2200 form completed by her employer stated that her employment contract required her to use a portion of her home from work, and that 90% of her duties of employment were performed in her home office.  She did not have an office at the employer's place of business, and said that the travel was employment travel because it was between two places of her employment, one being her home office.  The Court agreed.

In Tax Court case Campbell v. The Queen 2003 TCC 160 , a group of appellants who held office with a school board, and worked from home, were successful in arguing that the travel allowances they received for travel between their home offices and the school board offices were not taxable.  The appellants' home offices were their regular places of work, and they did not maintain offices at the school board building.  For these reasons, the Court was satisfied that the travel between the home offices and the school board building to attend meetings was not personal travel, and ruled that the expenses were exempt from taxation under the provisions of s. 6(1)(b)(vii.1) of the Income Tax Act.

Other Resources

Video Tax News Life in the Tax Lane August 2022 re required travel between home and work

TaxTips.ca Resources

Auto Taxable Benefits

Employee Tax Topics on our Personal Income Tax page

Employee Work-Space-in-Home Expenses

Capital Cost Allowance (CCA) - Zero-Emission Vehicles

Canada Revenue Agency (CRA) Resources

A reasonable per-kilometre allowance is tax-free, and is the easiest method for an employee to recover vehicle expenses.

Employees deducting vehicle expenses on their tax return must track vehicle kilometres and vehicle expenses for the entire year.

Revised: September 20, 2024

How to claim CRA medical travel expenses for 2023

The costs involved with traveling to receive medical attention can be significant when you factor in accommodation, meals, and related expenses.

Find out how to claim your CRA medical travel expenses.

IMPORTANT: All claims related to Medical Travel require documentation provided by the practitioner confirming your attendance (whether this be a receipt for services, or a letter signed by your service provider).

Claiming Mileage

There are two ways to claim transportation costs as a CRA travel medical expense but you have to travel at least 40 kilometers one way to obtain medical service that were not available locally.

Example: for trips to and from the hospital, clinic, or doctor’s office.

Record the distance of travel, calculate your mileage according to the province in which you reside. (2021 rates):

Example: 55¢ x 160km = $88.00; you may claim $88.00 as an eligible medical expense.

Vehicle expenses may be claimed as CRA medical travel expenses by submitting gas receipts for the date(s) of travel/service.

Claiming Meals, Accommodations and Parking

In addition to the transportation costs above, you may claim reasonable expenses during your trip for medical attention provided that you had to travel more than 80 kilometers to attend your appointment. The travel costs of one accompanying individual are also allowable, if it is deemed necessary to have a companion.

Meals can be claimed one of two ways: 1. Meal receipts can be submitted for reasonable costs for the patient and one attendant (alcoholic beverages will not be reimbursed) OR 2. A flat rate of $23 per meal may be claimed for the patient and one attendant up to a maximum of $69 per day per person.

Accommodations

Receipts must be enclosed for any reasonable accommodation fees that are being claimed (ie: hotel receipt). Coverage applies to the accommodations ONLY; telephone, movie charges and the like are not eligible for reimbursement.

Receipts must be enclosed for any parking lot fees incurred. Please refer to the CRA medical travel expenses website for further details

A farmer lives in rural Alberta. There is not much in the way of medical services, vision care, or therapeutic care, such as physiotherapy, available in this small town.  Consequently, most treatment modalities require travelling to a center that has the appropriate medical facilities. The closest center is 44 kilometers from their home.

On a recent trip, they had chiropractic services performed and managed to visit the dentist for a check-up and teeth cleaning.  They were eligible to be reimbursed for the cost of the travel between their home and where the services took place.

In Alberta, that amounts to 53 cents a kilometer – so they were also able to claim $46.64 for travel expenses (there and back).  An alternative is to submit gas receipts for the dates of travel service.

On occasion, the same farmer requires a medical service that was only available on a timely basis in a major medical facility in the USA. This service was available in Canada but the wait time was over six months and the inconvenience to our customer as a result of their condition necessitated a faster remedy. They chose the US destination for the service.

As the travel distance now exceeded 80 Kilometers, in addition to the travel costs (economy class air fare), our customer can claim reimbursement for meals, accommodations, parking as well as the costs associated with a companion travelling with the patient if deemed necessary. An eligible travel expense claim of this magnitude represents a significant savings. 

How to write off 100% your medical expenses

Are you an incorporated business owner with no arm's length employees? Learn how to use a Health Spending Account to pay for your medical expenses through your corporation:

Do you own a corporation with arm's length employees? Discover a tax deductible health and dental plan that has no premiums:

Learn more about a Health Spending Account

Are you an incorporated business owner with no employees? Learn how to use a Health Spending Account to pay for your medical expenses through your corporation: 

Do you have a corporation with employees? See why a Health Spending Account makes for great employee benefits:

What's in this article

Subscribe to the blog

Discover more.

What is a health care spending account?

Health care spending accounts help business owners save on medical costs by turning after-tax...

By Alden Hui on December 8, 2020

What's covered in a Health Spending Account?

{}{}{% raw...

By Alden Hui on October 15, 2019

7 Key Health Spending Account Rules that you should know

A Health Spending Account (HSA) is a tax-free benefit which allows small business owners and their...

By Alden Hui on April 25, 2019

This website stores cookies on your computer. To find out more about the cookies we use, see our Privacy Policy .

High Contrast

• Asia Pacific
• Latin America
• North America
• Afghanistan
• Bosnia and Herzegovina
• Cayman Islands
• Channel Islands
• Dominican Republic
• El Salvador
• Equatorial Guinea
• Hong Kong SAR, China
• Ireland (Republic of)
• Ivory Coast
• Macedonia (Republic of North)
• Netherlands
• New Zealand
• Philippines
• Puerto Rico
• Sao Tome & Principe
• Saudi Arabia
• South Africa
• Switzerland
• United Kingdom

• AI, analytics and cloud services
• Audit and assurance
• Business strategy and operations
• Business tax
• Family office
• Financial consulting
• Global business services
• Managed services and outsourcing
• Mergers and acquisitions
• Private client services
• Professional Services+
• Restructuring and recovery
• Risk, fraud and cybersecurity
• See all services and capabilities

Strategic technology alliances

• Sage Intacct
• Budget commentary
• Middle market economics
• Supply chain
• The Real Economy
• The Real Economy Blog
• Construction
• Consumer goods
• Financial services
• Food and beverage
• Government and public sector
• Life sciences
• Manufacturing
• Private equity
• Professional services
• Real estate
• Restaurants
• Technology companies
• Financial management
• Financial reporting resources
• Tax regulatory resources

Featured technologies

Platform user insights and resources.

• RSM Technology Blog
• Environmental, social, and governance
• Middle market focus
• Our global approach
• RSM alumni connection
• RSM Classic experience

Experience RSM

• Your career at RSM
• Student opportunities
• Experienced professionals
• Executive careers
• Life at RSM
• Rewards and benefits

Spotlight on culture

Work with us.

• Careers in assurance
• Careers in consulting
• Careers in operations
• Careers in tax
• Apply for open roles

Popular Searches

Asset Management

Health Care

Partnersite

Your Recently Viewed Pages

Lorem ipsum

Dolor sit amet

Consectetur adipising

Reimbursements and allowances for remote workers’ travel expenses

This content was originally published in the Canadian Tax Foundations newsletter: Canadian Tax Focus. Republished with permission.

Travel between an employee’s residence and a regular place of employment (RPE) has long been considered by the Canada Revenue Agency (CRA) to be personal travel and not part of the employee’s office or employment duties; therefore, any reimbursement or allowance relating to this travel is a taxable benefit. Conversely, where travel relating to a location other than an RPE is involved, such payments are non-taxable.

But what is an RPE in this era of remote work? A recent technical interpretation provides that a location used for a one-time, multi-day training session for remote workers is not an RPE for those workers (CRA document no. 2022-0936671I7, June 30, 2022); the CRA therefore concludes that the reimbursements and allowances for travelling there are generally non-taxable. However, the CRA notes one exception: allowances for meals (and presumably lodging) are non-taxable only if the rules for a special work site apply.

The CRA generally comments that whether a location is an RPE is a question of fact. CRA document no. 2012-0432671E5 (August 13, 2012) observes that a location could be an RPE even if the employee works there only once or twice a month, but the location might not be an RPE if the employee works there only once or for a few days during the year. In contrast, CRA document no. 2016-0643631E5 (August 17, 2020) declines to offer an opinion on a situation where an employee works at two different locations on alternating weeks. The 2022 technical interpretation takes more definitive positions, which are favourable to the employee.

The 2022 technical interpretation concerns an employer’s plans to hire new employees who reside far from the employer’s offices. The employees may work from home or designate one of the employer’s offices as their place of work, without requiring regular attendance or reserving an onsite workspace. The employer will also provide the necessary equipment for remote work. In addition, the employees will be required to attend a single three-day event during their employment contract for training and team-building activities. For employees who are required to attend, the employer will reimburse reasonable accommodation and transportation costs (bus, train) or provide a per-kilometre motor vehicle allowance. A meal allowance will also be provided.

The CRA concludes that the work location designated in the employment contract is not considered to be an RPE for the new employees. Therefore, reimbursements of travel expenses do not need to be included in their income under paragraph 6(1)(a). Also, reasonable per-kilometre allowances received by employees for the use of their motor vehicle for travel in the course of performing their duties will not be included in their income by virtue of subparagraph 6(1)(b)(vii.1).

The CRA notes that the situation for meal allowances is different. The exemption in subparagraph 6(1)(b)(vii) for reasonable allowances for travel expenses that are not for the use of a motor vehicle requires that the employee be travelling away from the municipality where the employer’s establishment is located. Since the employee’s home is not such an establishment, this condition is not satisfied. However, the CRA notes that the meal allowance could be non-taxable by virtue of subsection 6(6)—special work site. The CRA agrees that the work to be performed (that is, training and team-building activities) is considered temporary in nature and required as part of the employee’s duties. As such, the amounts paid for travel will not be required to be included in their income if all other conditions of the subsection are met. In particular, the employee must be away from home or at the special work site for at least 36 hours and cannot be expected to return home daily from the special work site because of the distance involved.

Similar reasoning would presumably apply to allowances for lodging expenses, although this issue was not discussed.

RSM contributors

Get our tax insights in your inbox

Rsm tax professionals stay on top of changing legislation and provide perspective to help you keep your business running smoothly..

THE POWER OF BEING UNDERSTOOD

ASSURANCE | TAX | CONSULTING

• Accessibility plan
• RSM Canada client portals
• Cybersecurity

RSM Canada LLP is a limited liability partnership that provides public accounting services and is the Canadian member firm of RSM International, a global network of independent assurance, tax and consulting firms. RSM Canada Consulting LP is a limited partnership that provides consulting services and is an affiliate of RSM US LLP, a member firm of RSM International. The member firms of RSM International collaborate to provide services to global clients but are separate and distinct legal entities that cannot obligate each other. Each member firm is responsible only for its own acts and omissions, and not those of any other party. Visit rsmcanada.com/about for more information regarding RSM Canada and RSM International.

©2024 RSM CANADA LLP. All rights reserved. 

• Terms of Use

CRA says northerners can claim in-territory travel on income taxes as GN calls for reform

Nunavut finance minister says covid-19 kept many northerners from travelling south.

Social Sharing

The Canada Revenue Agency says northerners who didn't vacation south during the pandemic, can still claim northern travel on their tax returns this year.

The clarification follows calls for tax reform from Nunavut's finance minister, specifically for the CRA to enact three changes to the way the northern resident's deduction is calculated, both in the short and long term.

In August, George Hickes wrote to federal finance minister Chrystia Freeland, and national revenue minister Diane Lebouthillier.

He asked to allow Nunavut tax filers (and by extension, all northerners) to claim full travel benefits from their employers — also known as a vacation travel allowance, or a personal leave travel allowance, or Box 32 on a T4 slip — regardless if northerners travelled or not in 2020.

"This will allow Nunavummiut to remain in territory while a non-essential travel ban is in place, without losing an important tax benefit," Hickes wrote in the letter, obtained by CBC News.

"This is a particular issue in the context of COVID-19 as our governments encourage Canadians to stay close to home."

Hickes also asked for a more permanent change, in allowing northerners to claim expenses incurred for any travel, regardless of destination, opening the door to allow for northern travel to be claimed on a tax return.

"I do recognize that people have travelled, but a lot of people have been adhering to the rules," Hickes said in an interview with CBC.

"This is an opportunity to recognize the people that have been very conscientious to their communities and to their families."

Northern travel claims already allowed, CRA says

In statements to CBC News, the CRA wouldn't address the requests in Hickes' letter, but clarified northerners are already able to claim northern travel expenses on their tax returns, so long as they have receipts to back up their claims.

Of course, as always, taxpayers can only claim the lowest of three components: the employer benefit mentioned above, the actual cost of the trips and the lowest return airfare.

Regarding the lowest return airfare figure, the CRA says taxpayers don't have to had actually flown to a southern destination to claim the amount.

"Regardless of the destination or mode of travel, a taxpayer is required to provide the cost of the lowest return airfare available at the time of the trip between the airport closest to the individual's residence and the nearest designated city's airport to calculate the deduction for travel benefits," the CRA said in an email.

For example, the CRA said, someone traveling from Iqaluit to Rankin Inlet to visit family can use the lowest return airfare for a trip to Ottawa, since Ottawa is the closest designated city to Iqaluit.

Changes to lowest return airfare also proposed

In his letter, Hickes also requested the CRA adopt a standard amount for the lowest return airfare calculation, rather than leaving it to taxpayers to source themselves.

Right now, taxpayers must contact northern airlines to obtain a figure. But in 2019, the CRA proposed changes to how to calculate the lowest return airfare, essentially suggesting taxpayers take a screenshot of the lowest offered fare at the time of booking their ticket.

Consultations on the changes closed in April 2019, with no word from the CRA since. Those proposed changes were also never adopted.

Still, Nunavut's finance minister says the CRA needs to simplify the process, which triggers frequent reassessments.

• Federal minister to look at 'abnormal' number of tax reviews in Northern Canada
• Northerners targeted for tax reassessment 51% more often than rest of Canada: document

"It's very dependant on the tax filer to gather the rates and the information from the airlines, and they're not always consistent," Hickes said in an interview.

"I think standardizing that information for tax filer would alleviate a lot of the pressure on the CRA, as well as residents of Nunavut of knowing what guidelines and what amounts are eligible."

Hickes said he's heard back from both Freeland and Lebouthillier, but only preliminarily. Northern Affairs Minister Dan Vandal is also involved in the discussions.

Related Stories

• Northerners share their CRA horror stories in wake of tax review story

External Links

• CRA: Changes coming to the lowest return airfare requirement

What Is the Travel Allowance? A Comprehensive Guide to Definitions and Employee Insights

A travel allowance is a fixed payment from an employer to cover employee expenses for work-related travel. It typically includes costs for lodging, meals, and incidental expenses. Organizations follow the Federal Travel Regulation to define allowances, ensuring proper compensation for corporate trips and maximum payment limits.

Travel allowances can be categorized into two main types: per diem and reimbursable expenses. Per diem is a fixed daily rate that covers all expenses, while reimbursable expenses require employees to submit receipts for costs incurred. Employers typically set travel allowances based on company policy or industry standards.

Understanding travel allowances is crucial for both employers and employees. Employers must establish clear guidelines to avoid confusion regarding what expenses qualify. Employees should familiarize themselves with these policies to maximize their reimbursement.

In the next section, we will explore how travel allowances are calculated and the implications of these expenses on an employee’s taxes. We will also highlight employee experiences, shedding light on the benefits and challenges associated with travel allowances. This deeper understanding will guide both employees and employers in managing travel expenses effectively.

Table of Contents

What Is the Travel Allowance?

Travel allowance is a sum of money provided by an employer to cover expenses incurred by an employee while traveling for work-related purposes. This allocation typically encompasses costs for transportation, meals, lodging, and other necessary outlays.

The definition aligns with guidance from the Internal Revenue Service (IRS), which emphasizes that travel allowances should be used explicitly for business-related travel costs and may not be used for personal expenses.

Travel allowances vary based on company policy, geographical location, and the nature of travel. Employers may set daily limits for meals and lodging or offer a flat rate. They usually require that employees document their expenses, sometimes mandate receipts for accountability, and validate expenditures against the allowance.

According to a 2022 report by the Global Business Travel Association, travel allowances help maintain employee satisfaction by reducing out-of-pocket expenses. Companies often customize their allowances to meet the unique needs of different travel circumstances.

Factors influencing travel allowances include business needs, travel frequency, and destination costs. Remote work trends may lead to decreased travel but may still require traveling for in-person meetings or conferences.

Approximately 70% of companies provide travel allowances, as reported by the Global Business Travel Association. As businesses adapt post-pandemic, new models may emerge for travel expenses.

Travel allowances can enhance employee engagement but also create financial strain if inadequate. Organizations need to assess trends in travel to create effective policies.

Examples include companies offering higher allowances for remote employees traveling to headquarters or those attending industry events. This targeted approach can aid in employee retention.

To address potential issues, companies should set transparent travel policies and communicate expectations clearly. Consulting with financial experts may also provide insights into managing allowances effectively.

Implementing technology for expense tracking applications enables streamlined reporting and helps ensure employees are reimbursed promptly.

What Are the Different Types of Travel Allowances?

The different types of travel allowances include per diem, transportation allowance, lodging allowance, and meal allowances.

• Transportation Allowance
• Lodging Allowance
• Meal Allowances

Travel allowances serve various purposes for employees and employers. Each type has its own unique definition and application in different contexts. Understanding these allowances can help ensure fair compensation and compliance with tax regulations.

Per Diem : Per diem is a daily allowance provided to employees to cover costs incurred while traveling for work. This allowance typically encompasses meals and incidental expenses. Employers determine the per diem rate based on federal guidelines or company policy. According to the General Services Administration (GSA), the standard per diem rate for U.S. travel varies by location, reflecting local costs. For example, in 2023, rates can be as high as $296 in cities like San Francisco.

Transportation Allowance : Transportation allowance compensates employees for their travel expenses to and from a worksite. This includes costs related to public transportation, taxis, or personal vehicle use. Employers may reimburse employees at a set rate or provide a mileage allowance. The IRS provides a standardized mileage rate, which was 65.5 cents per mile for 2023. Employers choose transportation allowances based on fiscal budgets and employee needs.

Lodging Allowance : Lodging allowance refers to the compensation for accommodation costs during business travel. This allowance may cover hotel expenses or other lodging arrangements. Companies typically set a cap based on the destination and time of the year. For instance, during industry conferences, rates can surge, prompting companies to adjust their lodging allowances accordingly. The choice of this allowance often depends on the location and nature of the business travel.

Meal Allowances : Meal allowances are funds allocated for food expenses incurred while traveling for work. Companies may provide a fixed amount per meal or a total daily limit. Employers often state meal allowances separately from per diem when they want to ensure that food expenses are explicitly reimbursed. The relevance of this allowance can vary, particularly in regions where local cuisine may be more expensive.

Overall, travel allowances play a crucial role in ensuring employees are not financially burdened while fulfilling their work obligations. Proper understanding and management of these allowances can lead to improved employee satisfaction and compliance with travel policies.

What is the Per Diem Travel Allowance?

Per Diem Travel Allowance refers to a daily allowance provided to employees to cover expenses incurred while traveling for work. It typically includes expenses for meals, lodging, and incidental costs.

According to the Internal Revenue Service (IRS), the per diem rate is based on the location of travel and is intended to simplify the reimbursement process for employees.

The per diem rate allows companies to streamline employee travel reimbursements. It offers a predetermined amount, reducing the need for employees to submit detailed receipts for every expense incurred. This system helps both employers and employees manage costs effectively.

The U.S. General Services Administration (GSA) defines per diem as the daily allowance for travel expenses established for federal employees, serving as a reference for businesses too.

Per diem allowances stem from various factors, including travel destination costs, duration of stay, and company policy. These allowances can vary significantly based on local cost-of-living indices.

In 2022, the average per diem rate for meals and incidentals in the U.S. was approximately $59, which can increase in high-cost cities, according to the GSA. As travel patterns evolve post-pandemic, forecasting per diem expenses remains crucial for budgeting purposes.

Per diem allowances influence employee satisfaction and financial management. They afford employees a sense of security while traveling, knowing that their basic needs will be met.

The economic implications can be significant, as businesses must factor these allowances into travel budgets.

For instance, companies operating in cities with higher living costs need to adjust accordingly to retain employees.

To enhance the effectiveness of per diem systems, experts recommend regular assessments of travel policies, including adjustments based on current living costs, to ensure fairness and competitiveness.

Implementing technology solutions, such as expense management software, can streamline the tracking of allowances and expenses, improving transparency and efficiency.

What is the Mileage Reimbursement Allowance?

Mileage reimbursement allowance is a payment to employees for the business miles they drive using their personal vehicles. This allowance compensates individuals for expenses incurred during business travel, including fuel, wear and tear, and other operating costs.

The Internal Revenue Service (IRS) provides guidance on mileage reimbursement. According to IRS guidelines, businesses can reimburse employees for mileage at a standard rate, which is adjusted annually based on average vehicle operating costs.

This allowance covers several aspects, including the specific mileage rate determined by the IRS, the process for submitting mileage claims, and the documentation required. Employees must track their business mileage accurately to receive reimbursement.

The IRS defines the standard mileage rate for business use of a vehicle. As of 2023, the rate is 65.5 cents per mile, which reflects rising vehicle operation costs, as reported in IRS Publication 463.

Factors influencing the mileage reimbursement allowance include fuel prices, vehicle expenses, and overall market conditions. Changes in these elements can impact the fairness and adequacy of the reimbursement process.

In 2022, the IRS observed a significant increase in the average cost of operating a vehicle, which necessitated the higher reimbursement rate. Continued fluctuations in fuel prices could affect future mileage rates.

Mileage reimbursement can influence employee job satisfaction and retention. Proper compensation fosters a positive working environment and encourages employees to use their vehicles for work purposes.

The implications of mileage reimbursement may extend to various areas, including employee morale, company finances, and the overall travel policy. Companies must balance the budgetary costs with employee satisfaction.

To address any discrepancies in mileage reimbursement, organizations should regularly evaluate their policies. Recommendations include staying informed about IRS updates and surveying employees on their needs.

Strategies such as adopting telecommuting, providing company vehicles, or utilizing rideshare options can mitigate expenses related to mileage reimbursement. Implementing efficient tracking systems can also improve the reimbursement process.

What is the Daily Allowance?

The Daily Allowance is a predefined sum of money allocated for daily expenses incurred while traveling for business purposes. This allowance covers costs such as meals, transportation, and incidental expenses.

According to the Internal Revenue Service (IRS), the Daily Allowance is specifically referred to as the per diem rate, which varies based on the location of travel. The IRS provides guidelines on how this allowance can be applied for tax deductions for businesses and employees.

The Daily Allowance varies widely depending on factors like location, duration of travel, and company policies. Employers typically set these rates based on government standards or industry benchmarks to ensure employees are not burdened financially while conducting business.

The General Services Administration (GSA) provides official rates for federal employees that serve as a reference for the private sector. These rates are determined by considering local costs for meals and lodging in different areas.

Economic conditions, inflation, and government regulations contribute to changes in the Daily Allowance. Employers must regularly review and adjust these allowances based on such factors.

In 2023, the GSA reported an average Daily Allowance of $155 for meals and incidentals, reflecting rising costs. Projections indicate an ongoing increase in rates, suggesting businesses should anticipate cost adjustments annually.

The impacts of the Daily Allowance affect employee satisfaction and productivity during business travel. Adequate allowances can lead to higher morale and less financial stress on employees.

This concept affects various dimensions, including the economy, as companies adjust budgets accordingly, and society, as employees may feel valued based on the support provided during travel.

For example, employees who receive sufficient allowances may perform better, leading to successful business outcomes.

To address this issue, organizations should review and update their Daily Allowance policies regularly. Experts recommend aligning allowances with inflation rates and local economic conditions to ensure fairness.

Employers can employ technologies such as travel expense tracking software and sophisticated budgeting tools to streamline processes and manage allowances effectively.

What Factors Determine the Travel Allowance Amount?

The travel allowance amount is determined by multiple factors, including distance traveled, mode of transportation, accommodation costs, meal expenses, and company policies.

• Distance Traveled
• Mode of Transportation
• Accommodation Costs
• Meal Expenses
• Company Policies
• Destination
• Duration of Travel

Understanding these factors is critical for accurately calculating travel allowance, as they can significantly impact the total reimbursement amount.

Distance Traveled : Distance traveled refers to the physical space between the employee’s location and the destination. Travel allowances often increase with longer distances. Companies may base allowances on mileage rates, which can vary. The IRS specifies a standard mileage rate that is often used for tax deductions, which was 56 cents per mile in 2021. This means a longer journey results in a higher allowance.

Mode of Transportation : Mode of transportation involves the type of travel chosen, such as car, train, or airfare. Each mode has different associated costs. For example, air travel typically incurs higher costs than train travel. Employers usually have policies specifying which transportation types are reimbursable. A 2020 study by the Global Business Travel Association noted that nearly 42% of companies prefer employees to use economy class for flights under a certain distance.

Accommodation Costs : Accommodation costs pertain to the expenses for lodging during business trips. Hotels, motels, or short-term rentals fall into this category. Companies often set per-night limits on what employees can claim, which might differ by location. For instance, the U.S. General Services Administration provides a breakdown of lodging rates based on city and time of year. This influences how much an employee can be reimbursed.

Meal Expenses : Meal expenses refer to the costs for food and beverages consumed while traveling. Companies often provide a daily allowance or a per-meal limit. For example, some organizations adhere to government guidelines on allowable meal costs. The IRS allows a standard meal deduction that employees may claim for travel, which was $66 per day for travel in the continental U.S. in 2021.

Company Policies : Company policies encompass the specific guidelines and procedures that define travel expenses. Each organization may have unique rules regarding allowance amounts, approved spending, and reporting requirements. For instance, some companies may require receipts for all expenses, while others may offer a flat rate. Research shows that approximately 58% of companies have a defined travel policy, significantly impacting what is reimbursed.

Destination : Destination refers to the location of travel, which can affect costs and allowances. Areas with higher living costs, such as major cities, may lead to increased allowances for meals and accommodations. The Council for Community and Economic Research provides reports on living costs across the United States, helping companies set appropriate allowances based on location.

Duration of Travel : Duration of travel refers to the length of the business trip, which can influence the total allowance. Longer trips may incur additional meal and accommodation expenses. Employers may also adjust allowances based on travel duration. Research shows that travel for more than five days typically receives 10-20% higher allowances due to increased expenses, according to data from the Association of Corporate Travel Executives.

These factors combine to create a comprehensive framework for travel allowances, ensuring employees are adequately reimbursed for their travel-related expenses.

How Do Geographic Locations Affect Travel Allowance?

Geographic locations significantly influence travel allowances due to variations in living costs, local regulations, and specific job requirements. These factors determine the amount an employer allocates to employees for work-related travel expenses.

Living Costs: Different regions have varying costs of living. For example, urban areas often have higher accommodation and meal costs than rural locations. According to the Council for Community and Economic Research (2022), cities like New York and San Francisco rank among the highest in living costs, prompting companies to offer higher travel allowances to offset these expenses.

Local Regulations: Some jurisdictions impose regulations that impact allowable travel expenses. For instance, tax laws may define what can be claimed as deductible travel expenses. The IRS (2023) provides guidelines on mileage, lodging, and meal allowances, affecting how much businesses can allocate and how employees can report these costs.

Job Requirements: Certain positions may require more frequent travel or longer durations away from home. For example, sales representatives or field technicians often incur higher travel-related expenses. According to a study by the Global Business Travel Association (2021), companies assess travel patterns and adjust allowances based on the frequency and nature of the trips required for specific roles.

Company Policy: Individual companies may establish their travel allowance policies based on industry standards or budget constraints. Organizations may conduct annual reviews to assess and adjust travel allowances in response to external economic factors. For example, a company in a financial crisis may reduce travel budgets, impacting travel allowances.

In summary, geographic locations affect travel allowances through variations in living costs, local regulations, specific job requirements, and individual company policies. Understanding these factors is crucial for both employers and employees in managing travel-related expenses effectively.

What Role Do Company Policies Play in Travel Allowance Rates?

Company policies play a crucial role in determining travel allowance rates by establishing the guidelines and frameworks that govern employee reimbursements for travel-related expenses. These policies ensure consistency, fairness, and compliance within the organization.

The main points related to the role of company policies in travel allowance rates include:

• Standardization of Allowances
• Compliance with Tax Regulations
• Budget Management
• Transparency and Fairness
• Employee Satisfaction and Retention
• Flexibility and Adaptability

Understanding how these elements interact can provide insights into their significance in travel allowance rates.

Standardization of Allowances: Standardization of allowances refers to the consistent application of travel reimbursement rates across all employees. This prevents disparities and fosters fairness. For instance, if a company sets a per diem rate of $50 for meals, all employees traveling for work receive the same amount. A study by the Global Business Travel Association in 2020 highlighted that companies with standardized policies reported lower disputes regarding travel expenses.

Compliance with Tax Regulations: Compliance with tax regulations ensures that travel allowances meet legal requirements. Organizations must navigate tax laws to avoid financial penalties. According to the IRS, travel allowances may be subject to taxation if not properly structured. This compliance impacts the amount offered to employees and decisions regarding direct payments versus reimbursements.

Budget Management: Budget management involves setting limits on travel expenses to control organizational costs. Companies typically allocate budgets for travel, which impact allowance rates. For example, if a company has a tight travel budget, it may reduce allowance rates accordingly. A survey from CFO Magazine in 2021 indicated that 67% of finance executives cited budget constraints as a reason for adjusting travel policies.

Transparency and Fairness: Transparency and fairness in policies build trust within the workforce. Clear guidelines published in the travel policy help employees understand their entitlements. This openness tends to reduce confusion and potential conflicts. According to a report by Gallup in 2019, organizations with transparent policies enjoyed higher employee engagement levels, indicating that transparency positively affects workplace morale.

Employee Satisfaction and Retention: Employee satisfaction and retention are influenced by the perceived fairness of travel allowances. When employees feel valued through adequate reimbursement, it can lead to increased job satisfaction. Research by the Society for Human Resource Management in 2021 found that 54% of employees cited travel benefits as a key factor in job satisfaction.

Flexibility and Adaptability: Flexibility and adaptability in company policies allow organizations to respond to various travel-related situations. For example, during economic downturns or global events, policies may be adjusted to maintain financial stability. A 2020 study published in the Harvard Business Review showed that companies that adapted their travel policies during the pandemic were better able to manage costs and maintain employee trust.

By addressing these aspects, company policies significantly shape travel allowance rates, impacting employee experiences and organizational efficiency.

What Are the Tax Implications of Travel Allowances?

Travel allowances can have significant tax implications for both employers and employees. These allowances may be taxable or non-taxable, depending on various factors such as the purpose, amount, and documentation provided.

• Types of Travel Allowances: – Per diem allowances – Actual expense reimbursements – Direct payments for travel expenses – Fringe benefits associated with travel – Tax treatment differences between local and international travel

Tax implications may vary significantly based on the type of travel allowance provided. Each type has specific regulations and reporting requirements that can affect both parties involved.

• Per Diem Allowances: Per diem allowances refer to daily payments given by employers to cover employees’ travel-related expenses. These payments are often structured to cover meals, lodging, and incidentals. The IRS allows a standard rate for per diem expenses, which may not be taxable if the employee follows specific guidelines and the allowance does not exceed this rate.

According to the IRS, if the per diem amount matches the government-established per diem rates for the travel location, it is generally not taxable. However, if an employer pays more than the IRS rate, the excess amount may be subject to income tax reporting (IRS Publication 463, 2022).

Actual Expense Reimbursements: Actual expense reimbursements occur when employers reimburse employees for their exact travel expenses, such as meals, hotels, and transportation. These reimbursements are typically not taxable to the employee if they are properly documented with receipts and adhere to the IRS rules. For instance, a study by the American Society of Travel Advisors highlights that clear, itemized receipts ensure that these reimbursements remain tax-free.

Direct Payments for Travel Expenses: Direct payments from an employer to a third party for travel-related expenses, such as hotel bookings or airfare, usually do not count as taxable income for the employee. However, the employer must keep accurate records of these direct payments to ensure compliance with IRS regulations.

Fringe Benefits Associated with Travel: Travel-related fringe benefits, such as travel upgrades or complimentary hotel stays, can be seen as additional income. These benefits are generally considered taxable unless they qualify as working condition benefits. The IRS defines working condition benefits as expenses that would otherwise be deductible if the employee paid for them out of pocket (IRS Publication 15-B, 2022).

Tax Treatment Differences Between Local and International Travel: The tax treatment of travel allowances can differ significantly based on whether the travel is local or international. For international travel, both the per diem rates and reimbursement procedures may be more complex due to different tax treaties and regulations in various countries. The IRS provides resources to help navigate these differences, making it important for employers and employees to understand the implications of international assignments.

In summary, travel allowances carry various tax implications that depend on their structure, documentation, and the nature of the travel. It is crucial for employers and employees alike to be informed of these factors to ensure compliance and optimize tax benefits.

How Do Employees Use Travel Allowances?

Employees use travel allowances to cover business-related travel expenses, providing them financial support while traveling for work. These allowances typically include costs like transportation, lodging, meals, and incidentals.

Transportation: Employees use travel allowances to reimburse expenditures on flights, trains, or car rentals. According to the U.S. Department of Labor (2021), these costs can vary significantly based on distance and mode of transportation.

Lodging: Travel allowances often cover hotel expenses. A survey by the Global Business Travel Association (GBTA, 2022) indicated that, on average, corporate travelers spend approximately $150 per night on accommodations.

Meals: Employees can use part of their travel allowance for meals. The Internal Revenue Service (IRS, 2023) provides per diem rates for meals which depend on the travel destination. Employees can claim these rates to simplify expense reporting.

Incidentals: This category includes miscellaneous expenses like tips, parking fees, and internet charges. A study by Omega World Travel (2022) found that these costs can add up to around 15% of overall travel expenses.

By using travel allowances, employees can focus on their work responsibilities without worrying about out-of-pocket costs.

What Common Expenses Are Covered by Travel Allowances?

Travel allowances commonly cover expenses related to work-related travel. These allowances help employees manage costs incurred while traveling for business purposes.

• Transportation costs
• Accommodation expenses
• Meals and incidentals
• Fuel and parking fees
• Tolls and public transportation fares
• Conference and event registration fees

Understanding these expenses provides clarity on what can be claimed under travel allowances. Let’s explore each type of expense in detail.

Transportation Costs : Transportation costs include fees related to air travel, train tickets, taxi rides, or car rentals. Employers often provide allowances to cover these travel expenses fully. A study by the Global Business Travel Association (GBTA) highlights that transportation can account for up to 60% of total travel costs.

Accommodation Expenses : Accommodation expenses refer to hotel stays or any lodging required during business trips. Employers typically reimburse these costs based on pre-approved rates. According to a report by Hotels.com, the average cost of a hotel room in major cities has increased by 10% over the past year, making clear allowances vital for employees.

Meals and Incidentals : Meals and incidentals cover food, beverages, and minor expenses incurred during travel. Employers may provide a per diem allowance, which is a daily amount assigned for these expenses. The IRS suggests that average meal costs for business travel should not exceed certain limits, which varies by location.

Fuel and Parking Fees : Fuel and parking fees are expenses related to operating a vehicle during a trip. This may include gas costs or fees for parking in garages. A survey by AAA found that fuel prices can significantly affect business travel budgeting, emphasizing the importance of these allowances.

Tolls and Public Transportation Fares : Tolls refer to fees paid for road access and public transportation fares include bus, train, or subway tickets. Employers should anticipate and cover the costs related to these modes of transportation to ensure smooth business travel experiences.

Conference and Event Registration Fees : Conference and event registration fees encompass costs associated with attending professional gatherings. Such fees can vary widely based on the event’s prestige and location. According to Statistics Canada, professionals typically attend numerous events annually, making allowances crucial for continued participation and networking.

In conclusion, travel allowances serve to reimburse employees for multiple work-related travel expenses, ensuring that finances do not deter effective business operations.

How Do Employees Benefit from Travel Allowances?

Employees benefit from travel allowances by receiving financial support for work-related travel expenses, which improves their job satisfaction and productivity.

Details regarding the benefits of travel allowances include the following points:

Financial support: Travel allowances cover costs such as transportation, lodging, and food. According to a study by the Global Business Travel Association (GBTA, 2020), 73% of business travelers report that travel reimbursement significantly eases their financial burden.

Increased job satisfaction: When employees do not have to worry about out-of-pocket expenses, they often report higher job satisfaction. A survey conducted by Deloitte (2021) showed that employees who receive travel allowances are 30% more likely to be satisfied with their job compared to those who do not.

Enhanced productivity: Employees can focus on their work instead of managing costs. The Institute of Travel Management (ITM, 2022) found that organizations offering travel allowances saw a 22% increase in employee productivity while traveling.

Motivation and retention: Providing travel allowances can encourage employees to take necessary trips for their roles, leading to better performance. A report by the Society for Human Resource Management (SHRM, 2022) noted that travel benefits are an essential factor in retaining talent, with 65% of employees indicating they would be more likely to stay at a company that offers such perks.

Improved work-life balance: Employees appreciate travel allowances as they allow them to manage their work-related responsibilities without sacrificing personal finances. According to the Employee Engagement Survey (2023) by Gallup, employees with favorable travel policies reported a healthier balance between their professional and personal lives, leading to improved well-being.

Overall, travel allowances support employees in various ways, contributing positively to their financial situation, job satisfaction, and overall performance.

What Best Practices Can Companies Implement for Travel Allowances?

Companies can implement the following best practices for travel allowances to ensure fairness and compliance.

• Establish Clear Policies
• Set Pre-Approved Allowance Limits
• Use Technology for Tracking
• Provide Training on Expense Reporting
• Regularly Review and Update Allowances
• Encourage Employee Feedback
• Address Compliance Requirements

To effectively address these practices, it is essential to delve into the details of each one.

Establish Clear Policies : Establishing clear policies on travel allowances provides guidance on what constitutes allowable expenses. Policies should detail travel categories, acceptable spending limits, and documentation requirements. For instance, the IRS recommends clear definitions of travel expenses to enhance transparency. Clear policies mitigate misunderstandings and foster trust.

Set Pre-Approved Allowance Limits : Setting pre-approved allowance limits establishes maximum spending guidelines for employees. This practice helps manage costs and simplifies the reimbursement process. For example, companies could establish daily limits for meals or lodging. Having clear limits creates accountability and prevents excessive spending.

Use Technology for Tracking : Using technology, such as travel management software, streamlines tracking travel expenses. This allows employees to submit expenses digitally and facilitates quicker approvals. Research by the Global Business Travel Association (2020) indicates that 70% of companies using travel technology saw cost reductions. Technology enhances efficiency in managing travel allowances.

Provide Training on Expense Reporting : Providing training on expense reporting equips employees with knowledge of how to accurately document their travel expenses. Training sessions can clarify policy details, expense categories, and acceptable documentation. A study by the Institute of Management Accountants (2021) found that organizations with comprehensive training programs reported 30% fewer discrepancies in expense claims.

Regularly Review and Update Allowances : Regularly reviewing and updating travel allowances keeps policies relevant to changing economic conditions. Companies should assess local costs and inflation rates to adjust allowances accordingly. Continuous evaluation ensures that employees are fairly reimbursed. For example, adjusting meal allowances annually can reflect rising food prices.

Encourage Employee Feedback : Encouraging employee feedback on travel policies fosters an inclusive culture. Employees can share their experiences and suggest improvements. Actively listening to feedback can uncover potential inefficiencies or dissatisfaction. For example, a survey could ask employees about their comfort with current travel allowances.

Address Compliance Requirements : Addressing compliance requirements ensures adherence to local laws and regulations regarding travel expenses. Companies should familiarize themselves with tax implications and labor laws that affect travel allowances. Failure to comply can lead to legal issues and financial penalties. Consulting with a tax advisor can help navigate these complexities.

Implementing these best practices will help companies create a fair, efficient, and compliant travel allowance system.

How Can Companies Optimize Travel Allowance Management?

Companies can optimize travel allowance management by implementing technology, establishing clear policies, tracking expenses effectively, and engaging employees in the process. Each of these strategies can lead to improved efficiency and cost-effectiveness.

Using technology: Many companies utilize expense management software to streamline the travel allowance process. Software can automate tracking and approvals. According to a study by Deloitte (2021), organizations that adopt such technology can reduce administrative time by up to 30%.

Establishing clear policies: Clear travel policies can guide employee behavior and set expectations. Well-defined guidelines inform employees about allowable expenses and reimbursement procedures. Research by the Global Business Travel Association (2020) shows that companies with clear policies save an average of 20% on travel costs compared to those without.

Tracking expenses effectively: Real-time expense tracking ensures that companies monitor expenses closely. Implementing tools that enable employees to submit costs as they incur them helps prevent overspending. A survey by ExpenseWatch (2022) indicated that businesses that adopt real-time tracking reduce unauthorized spending by approximately 25%.

Engaging employees in the process: Involving employees in travel allowance decisions can enhance compliance and satisfaction. Gathering employee feedback can lead to a better understanding of their needs and preferences. A case study by McKinsey & Company (2020) suggests that companies that engage employees in policy design see a 15% increase in adherence rates.

By adopting these strategies, companies can streamline travel allowance management, reduce costs, and enhance employee satisfaction.

• What is a travel agent
• What is the smallest coleman travel trailer
• What is the safest way to travel
• What is the purpose of travel insurance
• What is a travel trailer

Language selection

• Français fr

Employers' Guide Taxable Benefits and Allowances

From: Canada Revenue Agency

This information is available in 2 formats

Complete web version : option 1.

Go to the full version which has been optimized for online reading.

Review payroll topics

HTML version of PDF guide : Option 2

Scroll down to read the publication: T4130, Employers' Guide Taxable Benefits and Allowances.

Payroll topics

The following payroll topic  relates to taxables benefits and allowances.

• Calculate payroll deductions and contributions

Learn about CPP contributions, EI premiums and income tax deductions, how to calculate the deductions on the amounts you pay, includes how to determine if you need to deduct CPP, EI and income from benefits and special payments

Available electronically only

T4130(E) Rev. 23

The CRA publications and personalized correspondence are available in braille, large print, e-text, and MP3. For more information, go to Order alternate formats for persons with disabilities or call 1-800-959-5525 .

Unless otherwise stated, all legislative references are to the Income Tax Act or, where appropriate, the Income Tax Regulations.

The CRA uses the term "Indian" as it has legal meaning under the Indian Act.

La version française de ce guide est intitulée Guide de l'employeur – Avantages et allocations imposables.

Find out if this guide is for you

Use this guide if you are an employer and you provide benefits or allowances to your employees, including individuals who hold an office, for items such as:

• automobiles or other motor vehicles
• board and lodging
• gifts and awards
• group term life insurance policies
• interest-free or low-interest loans
• security options
• tool reimbursement or allowance
• transit passes
• tuition fees

If you or a person working for you is not sure of the worker’s employment status, either one of you can request a ruling to determine the status. If you are a business owner, you can use the "Request a CPP/EI ruling" service in  My Business Account . If you are an individual, you can use the “Request a CPP/EI ruling” service in  My Account . You can also fill out and mail  Form CPT1, Request for a CPP/EI Ruling – Employee or Self-Employed to the CPP/Rulings Division at the Tax Services Office in the province or territory of your residence or place of business. See the table found on Form CPT1 for the mailing addresses. For more information on employment status, go to Canada Pension Plan (CPP) and Employment Insurance (EI) Rulings .

A benefit or allowance can be paid to your employee in cash (such as a meal allowance) or provided to your employee in a manner other than cash (such as a parking space or a gift).

You may have to include the value of a benefit or allowance in an employee's income, depending on the type of benefit or allowance and the reason you give it.

This guide explains your responsibilities and shows you how to calculate the value of taxable benefits or allowances.

For information on calculating payroll deductions, go to  How to calculate .

For information on filing an information return, go to When to file information returns .

A new taxable benefit policy applies to the following benefits:

• Certain gift cards which cannot be converted to cash can be treated as non-cash for the purposes of our gifts and awards policy
• Virtual and combined in-person and virtual social events
• A new ration has been introduced to clarify scramble parking

Table of Contents

Reimbursement, determine if the benefit is taxable, calculate the value of the benefit, calculate payroll deductions, file an information return, employee's allowable employment expenses, motor vehicle, personal driving (personal use), keeping records, calculating a standby charge for automobiles you own or lease, calculating an operating expense benefit, motor vehicle home at night policy, reporting automobile or motor vehicle benefits, reasonable per-kilometre allowance, per-kilometre allowance rates that are not considered reasonable, flat-rate allowance, combination of flat-rate and reasonable per-kilometre allowances, reimbursement or advance for travel expenses, reducing tax deductions at source on automobile or motor vehicle allowances.

• Reporting automobile or motor vehicle allowances on the T4 slip

Aircraft Benefits

Exceptions to the rules.

• Board and lodging allowances paid to players on sports teams or members of recreation programs

Special work sites

Remote work locations, payroll deductions, cell phone and internet services, child care expenses, counselling services, discounts on merchandise and commissions from personal purchases, educational allowances for children, subsidized school services, scholarships, bursaries, tuition, and training, scholarship and tuition fees, employment insurance premium rebate, rules for gifts and awards, policy for non-cash gifts and awards, long-service awards, awards from a manufacturer, calculating the benefit, reporting the benefit, housing or utilities – benefit, housing or utilities – allowance, clergy residence, non-group plans, group sickness or accident insurance plans, employee-pay-all plans, group disability benefits – insolvent insurer, loans received because of employment, loans received because of shareholdings, home-purchase loan, home-relocation loans, forgiven loans, prescribed interest rates, loyalty and other points programs, overtime meals or allowances, subsidized meals.

• Medical expenses

Moving expenses paid by employer that are not a taxable benefit

Moving expenses paid by employer that are a taxable benefit, non-accountable moving allowances, municipal officer's expense allowance, pooled registered pension plans (prpp), power saws and tree trimmers.

• Premiums under provincial hospitalization, medical care insurance, and certain Government of Canada plans

Private health services plan premiums

Professional membership dues, recreational facilities and club dues, taxable benefit, payroll deductions, security options deduction – paragraph 110(1)(d).

• Security options deduction for the disposition of shares of a Canadian-controlled private corporation (CCPC) – Paragraph 110(1)(d.1)

Social events

Spouse's or common-law partner's travelling expenses, tax-free savings account (tfsa), tool reimbursement or allowance.

• Airline passes for employees and retirees of an airline company

Transit passes

• Transit passes – employees of a transit company

Part-time employee

Salesperson and clergy, other employees, reasonable travel allowances.

• Uniforms and protective clothing

Places with developed rental markets

Places without developed rental markets, allowable ceiling amounts.

• Board, lodging, and transportation at a special work site in a prescribed zone  

Medical travel assistance

Employee does not pay the gst/hst on taxable benefits, find out if you have to remit gst/hst on employee taxable benefits.

• Situations where you are not considered to have collected the GST/HST

Value of the benefit

Automobile operating expense benefits.

• Benefits other than automobile operating expense benefits

Automobile benefits – standby charges, operating expense benefit, and reimbursements

Itc restrictions, property acquired before 1991 or from a non-registrant, benefits chart, receive your cra mail online, create a pre-authorized debit agreement from your canadian chequing account, if you need help, direct deposit, forms and publications, electronic mailing lists, related publications, tax information phone service (tips), teletypewriter (tty) users.

• Formal disputes (objection and appeals)

Service complaints

Reprisal complaints, cancel or waive penalties and interest, chapter 1 – general information, what is a benefit, an allowance, or a reimbursement.

Your employee has received a benefit if you pay for or give something that is personal in nature:

• directly to your employee
• to a person who does not deal at arm’s length with the employee (such as the employee’s spouse, child, or sibling)

A benefit is a good or service you give, or arrange for a third party to give, to your employee such as free use of property that you own. A benefit includes an allowance or a reimbursement of an employee’s personal expense.

An allowance or an advance is any periodic or lump-sum amount that you pay to your employee on top of salary or wages, to help the employee pay for certain anticipated expenses without having them support the expenses. An allowance or advance is:

• usually an arbitrary amount that is predetermined without using the actual cost
• usually for a specific purpose
• used as the employee chooses, since the employee does not provide receipts

An allowance can be calculated based on distance, time or something else, such as a motor vehicle allowance using the distance driven or a meal allowance using the type and number of meals per day.

A reimbursement is an amount you pay to your employee to repay expenses they incurred while carrying out the duties of employment. The employee must keep proper records (detailed receipts) to support the expenses and give them to you.

What are your responsibilities

If you provide benefits to your employees, you always have to go through the same steps. If a step does not apply to you, skip it and go on to the next step:

• "Determine if the benefit is taxable"
• "Calculate the value of the benefit"
• "Calculate payroll deductions"
• "File an information return"

In this guide, "employee" includes an individual who holds an office, unless otherwise noted.

Your first step is to determine whether the benefit you provide to your employee is taxable and has to be included in their employment income when the benefit is received or enjoyed.

Whether or not a benefit is taxable depends on whether an employee or officer receives an economic advantage that can be measured in money, and whether that individual is the primary beneficiary of the benefit.

For more information, go to What is a taxable benefit .

The benefit may be paid in cash (such as a meal allowance or reimbursement of personal cellular phone charges), or provided in a manner other than cash, such as a parking space or a gift certificate. For more information and examples, go to Pensionable and insurable earnings .  

The manner in which you pay or provide the benefit to your employee will affect the payroll deductions you have to withhold. For more information, see Calculate payroll deductions .

Once you determine that the benefit is taxable, you need to calculate the value of the specific benefit.

The value of a benefit is generally its fair market value (FMV). This is generally the amount the employee would have had to pay for the same benefit, in the same circumstances, if there was no employer-employee relationship.

The cost to you for the particular property, good, or service may be used if it reflects the FMV of the item or service.

You must be able to support the value if you are asked.

Calculate the GST/HST on taxable benefits

When you calculate the value of the taxable benefit you provide to an employee, you may have to include:

• the GST / HST payable by you
• the PST that would have been payable if you were not exempt from paying the tax because of the type of employer you are or the nature of the use of the property or service

Use the  Benefits chart  to find out if you should include GST/HST in the value of the benefit. Some benefits have further information about GST/HST in the topic specific section.

The amount of the GST/HST you include in the value of the taxable benefits is calculated on the gross amount of the benefits, before any other taxes and before you subtract any amounts the employee reimbursed you for those benefits.

You do not have to include the GST/HST for:

• cash remuneration (such as salary, wages, and allowances)
• a taxable benefit that is an exempt supply or a zero-rated supply as defined in the Excise Tax Act

For more information on exempt or zero-rated supplies, go to Type of supply .

If you are a GST/HST registrant, you may have to remit the GST/HST for the taxable benefits you provide to your employees. For more information, go to About the GST/HST on benefits  or see Chapter 5 – Remitting the GST/HST on employee benefits .

After you calculate the value of the benefit, including any taxes that may apply, add this amount to the employee's income for each pay period or when the benefit is received or enjoyed. This gives you the total amount of income from which you have to make payroll deductions. You then withhold deductions from the employee's total pay in the pay period in the normal manner. The deductions you withhold, especially the employment insurance (EI) premiums, will depend on whether the benefit you provide is cash, non-cash, or near-cash. 

If you provide your employee with a monthly taxable benefit, you may include a prorated value in your employee's income in each pay period in the month.

Cash benefits

Cash benefits include such things as:

• physical currency
• direct deposit

Canada Pension Plan (CPP) – When a cash benefit is taxable, it is also pensionable. This means you have to deduct CPP contributions from the employee's pay. It also means that you have to pay your employer's share of CPP to the Canada Revenue Agency (CRA).

If the employment is not pensionable under the CPP, then any taxable benefits paid in cash are not pensionable and CPP contributions should not be withheld. For more information, go to  How to calculate .

Employment insurance (EI) – When a cash benefit is taxable, it is also insurable. This means you have to deduct EI premiums from your employee's pay. It also means that you have to pay the employer's share of EI to the CRA.

If the employment is not insurable under the Employment Insurance Act , then any taxable benefits paid in cash are not insurable and EI premiums should not be withheld. For more information, go to How to calculate .

Income tax – When a cash benefit is taxable, you have to deduct income tax from the employee's total pay in the pay period.

Non-cash or near-cash benefits

A non-cash (or “in kind”) benefit is the actual good, service, or property that you give to your employee. This includes a payment you make to a third party for the particular good or service if you are responsible for the expense.

A near-cash benefit is one that functions as cash, or something that can easily be converted to cash, such as a security, stock, or gold nugget. For more information on near-cash benefits, see Gifts, awards, and long-service awards .

CPP – When a non-cash or near-cash benefit is taxable, it is also pensionable. This means you have to deduct CPP contributions from the employee's pay. It also means that you have to pay your employer's share of CPP to the CRA.

Except for security options, if a non-cash taxable benefit is the only form of remuneration you provide to your employee in the year, there is no remuneration from which to withhold deductions. You do not have to withhold CPP contributions on the amount of the benefit, even if the value of the benefit is pensionable. Also, you do not have to remit your share of the CPP amounts.

Always report the value of the non-cash benefit in box 14 "Employment income," and box 26 "CPP/QPP pensionable earnings," of the T4 slip, even if you did not have to deduct CPP/QPP contributions.

EI  – A taxable non-cash or near-cash benefit is generally not insurable. Do not deduct EI premiums.

Exceptions to this rule are:

• The value of board and lodging an employee receives during a period in which you pay the employee a salary in cash. For more information, see Board and lodging
• Employer-paid RRSP contributions when the employee can withdraw the amounts. For more information, see Registered retirement savings plans (RRSPs)

Income tax  – When a non-cash or near-cash benefit is taxable, you have to deduct income tax from the employee's total pay in the pay period. Except for security options, if a non-cash or near-cash benefit is of such a large value that withholding the income tax will cause undue hardship, you can spread the tax you withhold over the balance of the year. The CRA considers undue hardship to occur if the required withholding results in your employee being unable to pay reasonable expenses related to basic family needs. Basic family needs are those related to food, clothing, shelter, health, transportation, and childcare.

Except for security options, if a non-cash or near-cash taxable benefit is the only form of remuneration you provide to your employee, there is no remuneration from which to withhold deductions. You do not have to withhold income tax on the amount of the benefit, even if the value of the benefit is taxable.

For more information on calculating payroll deductions, go to Payroll deductions and contributions .

Use the Benefits chart  to find out if you should deduct CPP  contributions and EI  premiums on the taxable amounts, and which codes to use to report the taxable amounts on an employee's T4 slip. The chart also shows whether to include GST/HST in the value of the benefit for income tax purposes.

If you are an employer, report the value of the taxable benefit or allowance on a T4 slip in box 14, "Employment income." Also report the value of the taxable benefit or allowance in the "Other information" area at the bottom of the employee's slip and use code  40 , unless the CRA tells you to use a different code.

If you are a third-party payer providing taxable benefits or allowances to employees of another employer, report the benefits in the "Other information" area at the bottom of the T4A slip. Use the code provided for the specific benefit.

If you are a third party who provides travel benefits (travel assistance in a prescribed zone) to the employee of another employer, report these benefits under code 028 "Other income," in the "Other information" area at the bottom of the T4A slip.

If a benefit or an allowance described in this guide is non-pensionable, non-insurable, and non-taxable, do not include it in income and do not report it on an information slip.

For more information on reporting benefits and allowances, go to:

• When to file information returns
• Claiming deductions, credits, and expenses

Travel allowance

Your employee may be able to claim certain employment expenses on their income tax and benefit return if, under the contract of employment, the employee had to pay for the expenses in question. This contract of employment does not have to be in writing but you and your employee have to agree to the terms and understand what is expected.

• You allow your employee to use his personal motor vehicle for business and pay him a monthly motor vehicle allowance to pay for the operating expenses and you include the allowance in the employee's employment income as a taxable benefit
• You have a formal telework arrangement with your employee that allows this employee to work at home. Your employee pays for the expenses of this work space on their own

You have to fill out and sign Form T2200, Declaration of Conditions of Employment , and give it to your employee so they can deduct employment expenses from their income. By signing the form, you are only certifying that the employee met the conditions of employment and  had to pay for the expenses under their employment contract.

It is the employee's responsibility to claim the expenses on their income tax and benefits return and to keep records to support the claim.

For more information on allowable employment expenses, see:

Chapter 2 – Automobile and motor vehicle benefits and allowances

Information on the topics discussed in this chapter can be found at:

• Automobile and motor vehicle benefits
• Archived Interpretation Bulletin IT-63R5, Benefits, Including Standby Charge for an Automobile, from the Personal Use of a Motor Vehicle Supplied by an Employer – After 1992
• What is a taxable benefit

Definitions

Read through the following definitions. They will help you understand the terms and expressions the CRA uses in the information that follows.

An automobile is a motor vehicle that is designed or adapted mainly to carry individuals on highways and streets, and has a seating capacity of not more than the driver and eight passengers.

If the vehicle you provide to your employee is not included in the definition of automobile as described, see Benefit for motor vehicles not defined as an automobile .

Zero-emission passenger vehicles (ZEPVs) are automobiles. For more information about ZEPVs, see  What kind of vehicle do you own? .

An automobile  does not  include:

• an ambulance
• clearly marked police or fire emergency response vehicles
• clearly marked emergency medical response vehicles that you use to carry emergency medical equipment and one or more emergency medical attendants or paramedics
• a motor vehicle you bought to use primarily (more than 50% of the distance driven) as a taxi, a bus used in a business of transporting passengers, or a hearse in a funeral business
• a motor vehicle you bought to sell, rent, or lease in a motor vehicle sales, rental, or leasing business, except for benefits arising from personal use of an automobile
• a motor vehicle (other than a hearse) you bought to use in a funeral business to transport passengers, except for benefits arising from personal use of an automobile
• can seat no more than the driver and two passengers, and in the year it is acquired or leased is used (50% or more of the distance driven) to transport goods or equipment in the course of business
• in the year it is acquired or leased, it is used (90% or more of the distance driven) to transport goods, equipment, or passengers in the course of business
• are used (50% or more of the distance driven) to transport goods, equipment, or passengers in the course of earning or producing income
• are used at a remote work location  or  at a special work site that is at least 30 kilometres away from any community having a population of at least 40,000

If the back part or trunk of a van, pickup truck, or similar vehicle has been permanently altered and can no longer be used as a passenger vehicle, it is no longer considered an automobile as long as it is used primarily for business.

While the information in this chapter relates to an employee, it may also apply to the following taxpayers:

• a person who does not deal at arm's length with the employee
• an individual who holds an office or person who does not deal at arm's length with that individual
• a partner or person related to the partner
• a shareholder or person related to the shareholder

A motor vehicle is an automotive vehicle designed or adapted for use on highways and streets. It does not include a trolley bus or a vehicle designed or adapted for use only on rails. Although an automobile is a kind of motor vehicle, the CRA treats them differently for income tax purposes.

Zero-emission vehicles are cars and trucks powered by rechargeable electric batteries or hydrogen fuel cells.

Personal driving is any driving done for the purposes not related to employment.

An employee may use one of your owned or leased vehicles for purposes other than business or, an employee may use their personal vehicle to carry out employment duties and get an allowance for the business use of that vehicle. Whatever the situation, if your employee drives your vehicle for personal reasons or you reimburse your employee for the personal driving of their own vehicle, there is a taxable benefit that has to be calculated and included in their income.

 Personal driving includes:

• vacation trips
• driving to conduct personal activities
• travel between home and a regular place of employment, other than a point of call
• travel between home and a regular place of employment even if you insist the employee drives the vehicle home, such as when they are on call

Regular place of employment

A regular place of employment is any location where your employee regularly reports for work or performs the duties of employment. In this case, "regular" means there is some degree of frequency or repetition in the employee's reporting to that particular work location in a given pay period, month, or year. This "place" does not have to be an establishment of the employer.

 A regular place of employment may include:

• the office where your employee reports daily
• several store locations that a manager visits monthly
• a client's premises when an employee reports there daily for a six month project
• a client's premises if the employee has to attend biweekly meetings there

Depending on the circumstances, your employee may have more than one location where they regularly report for work. If your employee has multiple regular work locations and travels between home and several work locations during the day, only the trip from your employee's home to the first work location or, the trip from the last work location to home is personal driving. Any travel by the employee between work locations is business related.

Where you provide your employees with transportation to a regular place of employment, it may not be a taxable benefit if either of the following applies:

• You need to provide your employees with transportation from pickup points to an employment location when public and private vehicles are neither allowed nor practical at the location because of security or other reasons
• You need to provide transportation to your employee who works at a special work site or a remote location. If so, see Board, lodging, and transportation – Special work sites and remote work locations

Point of call

A point of call is a place the employee goes to perform their employment duties other than the employee's regular place of employment.

The CRA will consider the employee's travel between their home to a point of call to be "business" driving (and not a taxable benefit) if you need or allow the employee to travel directly from home to a point of call (such as a salesperson visiting customers, going to a client's premises for a meeting, or making a repair call) or to return home from that point.

It must be reasonable that the employee's travel to the point of call be made at that time and on the way to or from work. If it is unreasonable, then that distance is personal driving and is a taxable benefit.

The term "vehicle" used in this chapter includes both automobiles and motor vehicles not defined as automobiles.

You and your employees have to keep records on the usage of the vehicle so that you can properly identify the business and personal use amounts of the total kilometres driven in a calendar year. The records may contain information relating to the business destination such as the date, the name and address of the client, and the distance travelled between home and the client's place of business. For more information, go to Keeping records .

Calculating automobile benefits

An employee receives a taxable benefit if an automobile is made available because of the employee's current, previous, or intended office or employment. The benefit for an automobile you provide is generally:

• a standby charge for the year; plus
• an operating expense benefit for the year; minus
• any reimbursements employees make in the year for benefits you otherwise include in their income for the standby charge or the operating expenses

You can use the following tools to calculate the benefits:

• Automobile Benefits Online Calculator – Disclaimer
• Worksheet  – You can get Form RC18, Calculating Automobile Benefits , by going to Forms and publications or by calling  1-800-959-5525

The standby charge is for the benefit your employee gets when your owned or leased automobile is made available for their personal use. Any reimbursements you receive from your employee, other than expenses relating to the operation of the automobile, will decrease the standby charge that has to be included in your employee's income.

The following information about personal use, availability and reducing the standby charge is the same whether you own the automobile or lease it.

Availability and personal use

An automobile is available to your employee if they have access to or control over the vehicle. It includes any part of a day, weekends and holidays during the calendar year.

If your employee does not use your automobile for any personal driving, there is no taxable benefit, even if the automobile is available to your employee for the entire year. This applies as long as the kilometres driven by your employee were in the course of their employment duties and the vehicle is returned to your premises at the end of their work day.

Reducing the standby charge

Calculate the standby charge at a reduced rate if all  of the following conditions apply:

• you require your employee to use the automobile to perform their duties
• the employee uses the automobile more than 50% of the distance driven for business purposes
• the kilometres for personal use are not more than 1,667 per 30-day period or a total of 20,004 kilometres a year

Use one of the following tools to apply the reduced rate:

• The Automobile Benefits Online Calculator – Disclaimer , for 2018 and subsequent years
• Form RC18, Calculating Automobile Benefits

Automobile you own

There are two methods to calculate the standby charge when you own the automobile – the simplified calculation and the detailed calculation.

The simplified calculation has certain conditions that the employee has to meet. If the conditions are not met, you have to use the detailed calculation. To find out which calculation method is better for your employee, use Form RC18, Calculating Automobile Benefits .

The following information will help you fill in Form RC18 and the Automobile Benefits Online Calculator – Disclaimer .

1) Your automobile costs

The cost of your automobile for determining the standby charge is the total of the following two amounts:

• the cost of the automobile when you bought it, including options, accessories, and the GST / HST and PST , but not including any reduction for a trade-in
• the cost of additions (including the GST/HST and PST) you made to the automobile after you bought it (that you add to the capital cost of the automobile to calculate the deduction for depreciation)

Where the automobile was purchased from a non-arm's length person, the cost is generally equal to the fair market value when you bought it, including options and GST/HST or PST.

Specialized equipment you add to the automobile to meet the requirements of a disabled person or for employment (such as cellular phones, two way radios, heavy-duty suspension, and power winches) are not considered to be part of the automobile's cost for purposes of calculating the standby charge.

If you operate a fleet or pool of automobiles, go to  Fleet operations .

2) 30-day periods

When you divide the total days available by 30, round off the result to the nearest whole number if it is more than one.

20 days ÷ 30 = 0.67 (do not round off) 130 days ÷ 30 = 4.33 (round to 4) 135 days ÷ 30 = 4.50 (round to 4) 140 days ÷ 30 = 4.67 (round to 5)

3) Personal kilometres

See the section on Personal driving (personal use) .

4) Reimbursements

A reimbursement is an amount you receive from your employee to repay you for some of your automobile costs. The amount the employee reimburses you may be used to reduce the employee’s taxable benefit.

Fleet operations

You may operate a fleet or pool of automobiles from which an employee uses several automobiles during the year. If you assign an automobile to an employee from a fleet or pool on a long-term or exclusive basis, the cost of the automobile you have assigned to the employee should be used when you calculate their standby charge.

However, if the fleet is mostly the same or if you group it into a few similar groups, you can calculate the standby charge based on the average cost of the group from which you provide the automobile. You and your employee have to agree to this.

For more information on grouping automobiles by average cost, see archived Interpretation Bulletin IT-63R, Benefits, Including Standby Charge for an Automobile, from the Personal Use of a Motor Vehicle Supplied by an Employer – After 1992 .

Automobile you lease

You must use the detailed calculation to calculate the standby charge for employer leased automobiles. The following information will help you fill in Form RC18 and the Automobile Benefits Online Calculator – Disclaimer .

1) Your leasing costs

Leasing costs of your automobile used in calculating the standby charge includes both of the following category:

• the rental cost for the automobile
• any associated costs, such as maintenance contracts, excess mileage charges, terminal charges less terminal credits, and the GST / HST and PST that you pay to the lessor under the leasing contract

Leasing costs do not include liability and collision insurance costs.

Lump-sum lease payments

Lump-sum amounts you pay the lessor at the beginning or end of a lease that are not a payment to buy the automobile will affect the standby charge for the automobile.

Prorate the lump-sum payment you make at the beginning of a lease over the life of the lease and add it to the leasing cost.

If you make a lump sum payment at the end of a lease, the CRA considers the payment to be a terminal charge . This means your lease costs should have been higher and the standby charge for the automobile has been understated.

In this situation, you can use one of the following methods:

• add the terminal charge to the lease costs in the year you end the lease
• prorate the payment over the term of the lease and amend the T4 or T4A slip of the employee who used the automobile, as long as they agree and can still ask for an income tax adjustment for the years in question

Each employee can then write to any tax services office or tax centre and ask the CRA to adjust their income tax and benefit returns for those years.

A lump sum payment you receive from the lessor at the end of a lease is considered to be a terminal credit . When this happens, the standby charge for the automobile has been overstated since the lease costs should have been lower. In this situation, you can use one of the following methods:

• deduct the terminal credit from the lease costs in the year you end the lease
• amend the T4 or T4A slip of the employee who used the automobile and provide a letter explaining the reduction, as long as the employee agrees and can still ask for an income tax adjustment for the years in question

Whichever method you use when you make or receive a lump-sum payment at the end of the lease, include the GST/HST and PST.

Employees who sell or lease automobiles

You can modify the calculation of the standby charge for individuals you employ to sell or lease automobiles if all of the following conditions apply:

• you employ the individual mainly to sell or lease automobiles
• you made an automobile you own available to that individual or to someone related to that individual
• you acquired at least one automobile during the year

You can choose the rate of 1.5% instead of 2% for the automobile’s cost to you, and calculate your automobile cost as the greater of the following two amounts:

• the average cost of all new automobiles you acquired in the year to sell or lease
• the average cost of all automobiles you acquired in the year to sell or lease

The cost of an automobile is generally equal to its fair market value at the time of acquisition, including GST / HST and PST .

When you (or a person related to you) provide an automobile to an employee and pay for the operating expenses related to personal use (including the GST / HST and PST ), this payment is a taxable benefit for the employee.

Operating expenses include:

• gasoline and oil
• maintenance charges and repair expenses, less insurance proceeds
• licences and insurance

Operating expenses do not include:

• capital cost allowance for an automobile you own
• lease costs for a leased automobile
• parking costs, highway or bridge tolls

If you pay any amount of operating expenses, you have to determine the operating expense benefit by using either the optional or fixed rate calculation.

Optional calculation

You can choose this method to calculate the automobile's operating expense benefit if all of the following conditions apply:

• you include a standby charge in your employee's income
• your employee uses the automobile more than 50% of the distance driven in the course of their office or employment
• your employee notifies you in writing before the end of the tax year to use this method

If all of these conditions are met, calculate the operating expense benefit of the automobile at half of the standby charge before deducting any payments (reimbursements) your employee or a person related to your employee makes. In some cases, this optional calculation may result in a higher benefit amount than the fixed rate calculation.

Fixed rate calculation

The fixed rate for 2023 is 33¢ per kilometre of personal use (including the GST/HST and PST).

If the employee's main source of employment is selling or leasing automobiles, the fixed rate for 2023 is 30¢ per kilometre of personal use (including the GST/HST and PST).

Rates for previous tax years can be found in older versions of this guide or in section 7305.1 of the Income Tax Regulations.

When you use the fixed rate calculation, you still have to keep records of this benefit.

Reimbursement for operating expenses

If the employee reimburses you in the year or no later than 45 days after the end of the year for all actual operating expenses (including the  GST/HST and PST ) attributable to personal use, you do not have to calculate an operating expense benefit for the year.

If the employee reimburses you for part of the automobile's operating expenses in the year or no later than 45 days after the end of the year, deduct the payment from the operating expense benefit that you calculate.

In 2023 , you provided your employee with an automobile. She drove 30,000 kilometres during the year, with 10,000 kilometres for personal use.

You paid $3,000 in costs associated with maintenance, licences, and insurance.

Calculate the part of the operating expenses that relates to the personal use of the automobile as follows:

10,000 km ÷ 30,000 km × $3,000 = $1,000

If she reimbursed you for the total amount of $1,000 in the year, or no later than 45 days after the end of the year, you do not have to calculate an operating expense benefit for her.

However, if she reimbursed you for only $800 of the expenses you paid in the year, or no later than 45 days after the end of the year, the operating expense benefit is $2,500, calculated as follows:

10,000 km × 33¢ = $3,300

$3,300 − $800 = $2,500

Operating expenses paid by employee to third party

If you provide an automobile to an employee and you require your employee to pay a third party for part or all of the operating expenses, such as gas or oil changes, (including the GST / HST and PST ) in the year, administratively, the CRA will allow you to deduct the portion of the expenses paid by the employee that are attributable to personal use from the operating expense benefit that you calculated. Your records have to show that the employee paid the expenses directly to the third party.

The portion of the operating expenses that relates to personal use is the percentage obtained by dividing the number of personal kilometres by the total number of kilometres driven by the employee during the year while the automobile was available to the employee.

Excess amounts cannot be deducted from the employee’s standby charge that you calculated.

In 2023 , you provided your employee with an automobile. He drove  36,000 kilometres during the year, 12,000 kilometres of which were for personal use.

You paid $3,000 in associated insurance and maintenance during the year. Your employee paid $1,500 for gas and oil changes. He did not reimburse you for any of your costs and you did not reimburse him for any of his costs.

1) Calculate the employee’s operating expense benefit using the flat-rate calculation as follows:

12,000 km x 33¢ = $3,960

2) Calculate the personal portion of the operating expenses that he paid to a third party as follows:

12,000 km ÷ 36,000 km x $1,500 = $500

3) Calculate your employee’s taxable operating expense benefit by subtracting the amount you calculated in step 2 from the amount you calculated in step 1, as follows:

$3,960 – $500 = $3,460

Benefit for motor vehicles not defined as an automobile

Even if the vehicle you provide to your employee is not included in the definition of Automobile , there is still a taxable benefit for the employee for their personal driving.

You have to reasonably estimate the fair market value of your employee's personal use of your motor vehicle, including the GST/HST and PST. A reasonable estimate is considered to be the amount an employee would have had to pay in an arm's length transaction for the use of comparable transportation. It includes items such as the cost of leasing a comparable vehicle and any other related operating costs. For more information, go to paragraph 23 in the archived Interpretation Bulletin IT-63R5, Benefits, Including Standby Charge for an Automobile, from the Personal Use of a Motor Vehicle Supplied by an Employer – After 1992 .

Although other methods of calculating the value of your employee's taxable motor vehicle benefit are acceptable, the CRA generally accepts that the employment benefit arising from the employee's personal use of the vehicle will be considered reasonable if it is calculated using the rates shown under Reasonable allowance rates .

The standby charge and operating expense benefit calculations should not be used.

Depending on how your motor vehicle is used by your employee and the conditions that you place on the use of it, you may be able to calculate your employee's taxable benefit using the Motor vehicle home at night policy below.

Administratively, you can calculate the taxable benefit for your employee's personal use of the motor vehicle between home and work using the rates shown under Fixed rate calculation as long as your employee meets all of the following conditions:

• The motor vehicle is not an Automobile
• You tell your employee in writing that they cannot make any personal use of the vehicle, other than travelling between work and home

Your employee will have to maintain full logbooks of the vehicle’s use as proof that there was no other personal use.

3. You have valid business reasons for making the employee take the vehicle home at night, such as:

• it would not be safe to leave tools and equipment at your premises or at a worksite overnight
• your employee is on call to respond to emergencies (see Note ), and you provide the vehicle so the employee can respond more effectively to emergencies

4. The motor vehicle is specifically designed or suited for your business or trade and is essential for the performance of your employee’s duties. Just transporting the employee to the work location does not meet the condition of “essential in the performance of employment duties.” The following examples meet both conditions:

• The vehicle, such as a pickup truck or a van, is suitable for and is consistently used to carry and store heavy, bulky, or numerous tools and equipment. It would be difficult to load and unload the contents. The vehicle is essential to your employee in performing their job
• The vehicle is regularly used to carry harmful or foul-smelling material, such as veterinary samples or fish and game. The vehicle is essential to your employee in performing their job
• is a clearly marked emergency-response vehicle
• is specially equipped to respond rapidly
• is designed to carry specialized equipment to the scene of an emergency

The CRA generally considers an emergency to relate either to the health and safety of the general population or to a significant disruption to the employer’s operations.

For examples of situations where transportation to and from home is considered a taxable benefit, go to  Examples – Transportation to and from home .

Employee’s benefit

Report the value of the benefit including the GST/HST and PST that applies in box 14, “Employment income,” and in the “Other information” area under code  34 at the bottom of the employee’s T4 slip.

Also, report the benefit on a T4 slip when the individual is an employee/shareholder and you provide the vehicle to the individual (or a person related to that individual) in their capacity as an employee.

Shareholder’s benefit

Report the value of the benefit including GST/HST and PST that applies using code  028 , “Other income” in the “Other information” area at the bottom of the T4A slip if either of the following applies:

• the shareholder is not an employee
• the individual is an employee/shareholder, and you provide the vehicle to the individual (or person related to that individual) in their capacity as a shareholder

Automobile and motor vehicle allowances

An allowance is any payment that employees receive from an employer for using their own vehicle in connection with or in the course of their office or employment without having to account for its use. This payment is in addition to their salary or wages. An allowance is taxable unless it is based on a reasonable per-kilometre rate.

This section explains common forms of automobile and motor vehicle allowances.

Employees receiving a taxable allowance may be able to claim allowable expenses on their income tax and benefit return. For more information, see Employee's allowable employment expenses .

If you pay your employee an allowance based on a per-kilometre rate that is considered reasonable, do not deduct CPP contributions, EI premiums, or income tax.

The per-kilometre rates that the CRA usually considers reasonable are the amounts prescribed in section 7306 of the Income Tax Regulations . Although these rates represent the maximum amount that you can deduct as business expenses, you can use them as a guideline to determine if the allowance paid to your employee is reasonable. The type of vehicle and the driving conditions are other factors used to determine whether an allowance is considered to be reasonable.

The CRA considers an allowance to be reasonable if all  of the following conditions apply:

• The allowance is based only on the number of business kilometres driven in a year
• The rate per-kilometre is reasonable
• You did not reimburse the employee for expenses related to the same use of the vehicle. This does not apply to situations where you reimburse an employee for toll or ferry charges or supplementary business insurance, if you determined the allowance without including these reimbursements

When your employees fill out their income tax and benefit return, they do not include this allowance in income.

Reasonable allowance rates

For 2023 , they are:

• 68¢ per kilometre for the first 5,000 kilometres driven
• 62¢ per kilometre driven after that

In the Northwest Territories, Yukon, and Nunavut, there is an additional 4¢ per kilometre allowed for travel.

Rates for previous tax years can be found in older versions of this guide or in section 7306 of the Income Tax Regulations .

If you pay your employee an allowance based on a per-kilometre rate that is not considered reasonable (because it is either too high or too low), it is a taxable benefit and has to be included in the employee's income.

If you pay your employee an allowance based on a flat rate that is not related to the number of kilometres driven, it is a taxable benefit and has to be included in the employee's income.

If you pay your employee an allowance that is a combination of flat-rate and reasonable per-kilometre allowances that cover the same use for the vehicle, the total combined allowance is a taxable benefit and has to be included in the employee's income.

You pay an allowance to your employee as follows:

• a flat per-diem rate to offset the employee's fixed expenses for each day the vehicle is required
• a reasonable per-kilometre rate for each kilometre driven to offset the operating expenses

The flat per-diem rate compensates the employee for some of the same use on which the reasonable per-kilometre allowance is based. That is, the fixed expenses incurred by the employee to operate the vehicle.

The combined amount is considered one allowance and therefore taxable , since it is not based only on the number of kilometres the vehicle is used for employment purposes.

• a flat-rate per month for travel inside the employment district
• a reasonable per-kilometre rate for employment-related travel outside the employment district

Since the flat-rate allowance does not cover any of the same use of the vehicle on which the reasonable per-kilometre allowance is based, the allowances are considered separately.

The reasonable per-kilometre allowance paid for travel outside the district is not included in income . The amount based on a flat-rate paid for travel inside the district is taxable , since it is not based only on the number of kilometres for which the vehicle is used in connection with the employment.

Only the total of the monthly flat-rate allowance has to be reported in box 14, "Employment income," and in the "Other information" area under code 40 at the bottom of the employee's T4 slip.

A reimbursement is a payment you make to your employees as a repayment for amounts they spent (such as gas and meals) while conducting your business. Generally, the employee completes a claim or expense report detailing the amounts spent. Do not include a reasonable reimbursement (which is part of your business expenses) in the employee's income.

An advance is an amount you give to employees for expenses they will incur on your business. An accountable advance is one that you give to an employee who has to account for their expenses by producing vouchers and return any amount they did not spend.

Usually, a reimbursement or an accountable advance for travel expenses is not income for the employee receiving it unless it represents payment of the employee's personal expenses.

Averaging allowances

To comply with the rules on reasonable per-kilometre allowances, employees have to file expense claims with you on an ongoing basis, starting at the beginning of the year.

A flat-rate or lump-sum allowance that is not based on the number of kilometres driven cannot be averaged at the end of the year to determine a reasonable per-kilometre rate and then be excluded from the employee's income.

The CRA understands the administrative problems that can result from this. As a result, the CRA is giving you a choice. If you make accountable advances to employees for vehicle expenses, you do not have to include them in the employee's income if all  of the following conditions are met:

• there is a pre-established per-kilometre rate that is not more than a reasonable amount
• the rate and the advances are reasonable under the circumstances
• you document this method in the employee's record
• no other provision of the Income Tax Act requires you to include the advances in the employee's income

Employees have to account for the business kilometres they travelled and any advances they received. They have to do so on the date their employment ends in the year, or by December 31 , whichever is earlier.

At that time, you have to pay any amounts you owe the employee and the employee has to repay any amount over actual expenses . Where no repayment occurs, you cannot simply report the excess advances on the employee's T4 slip.

For more information on vehicle allowances, go to What is a taxable benefit .

In many cases, allowances that are not based only on a reasonable per-kilometre rate can later be substantially offset by the employees' expense deductions on their income tax and benefit returns. In these situations, employees can ask to reduce their tax deductions on their remuneration by filling out and sending in a Form T1213, Request to Reduce Tax Deductions at Source , or a written request to any tax services office along with the following information:

• the type of employment for which the employee will receive the allowance
• an estimate of the total vehicle allowances the employee will receive in the year
• an estimate of the business kilometres the employee will drive in the year
• an estimate of the employee's vehicle expenses for the year
• the amount for which the employee is requesting the waiver

If you have a number of employees in the same situation, you can get a bulk waiver for the group. This way, every employee does not have to make an individual request.

Reporting automobile or motor vehicle allowances on the T4 slip

If you provide an allowance that the CRA considers to be taxable to your employee, you have to enter the yearly total of this allowance in box 14, "Employment income," and in the "Other information" area under code 40 at the bottom of the employee's T4 slip. Do not report any amount that the CRA does not consider taxable.

Chapter 3 – Other benefits and allowances

If you give your employee access to an aircraft for personal purposes, the employee receives a taxable benefit. You have to add to the employee’s salary the fair market value of the benefit, minus any amount the employee paid. The value of the benefit is determined on the basis of what is reasonable in relation to the facts of the case and the manner in which the aircraft is used.

For more information about aircraft benefits, go to  Taxable benefit for the personal use of an aircraft .

Board and lodging

You may give your employee board and lodging which means that you provide them with accommodations and, in some cases, food. If you provide only meals to an employee, see Meals .

If you provide free lodging, or free board and lodging, to an employee, the employee receives a taxable benefit. As a result, you have to add to the employee's salary the fair market value of the board and lodging you provide. Report this amount in box 14, "Employment income," and in the "Other information" area under code  30 at the bottom of the employee's T4 slip.

If you provide subsidized lodging, or subsidized board and lodging, to an employee, the employee receives a taxable benefit. As a result, you have to add to the employee's salary the fair market value of the board and lodging you provide, minus any amount the employee paid. Report this amount in box 14, "Employment income," and in the "Other information" area under code  30 at the bottom of the employee's T4 slip.

There are certain situations that can affect the value of the taxable benefit your employee gets if you provide free or subsidized board and lodging. The exceptions are as follows:

• If you provide allowances for board and lodging to players on sports teams or members of recreation programs, see the next section
• If you provide board, lodging, or transportation, or allowances for board, lodging, or transportation to an employee who works at a special work site or a remote location, see  Board, lodging, and transportation – Special work sites and remote work locations

Board and lodging allowances paid to players on sports teams or members of recreation programs

You can exclude up to $411 (for 2023 ) per month from income for a board and lodging allowance for a participant or member of a sports team or recreational program if all of the following conditions are met:

• you are a registered charity or a non-profit organization
• participation with, or membership on the team or in the program is restricted to persons under 21 years of age
• the allowance is for board and lodging for participants or members that have to live away from their ordinary place of residence
• the allowance is not attributable to any services, such as coaching, refereeing, or other services to the team or program

Do not report the excluded income on a T4 slip.

Board, lodging, and transportation – Special work sites and remote work locations

It is possible for an employee to work at a location that is both a special work site and a remote work location. However, the benefit can only be excluded from the employee's income once .

If the special work site is in a prescribed zone , see Board, lodging, and transportation at a special work site in a prescribed zone .

Generally, a special work site is an area where temporary duties are performed by an employee who keeps a self-contained domestic establishment at another location as their principal place of residence. Because of the distance between the two areas, the employee is not expected to return daily from the work site to their principal place of residence.

A self-contained domestic establishment (SCDE) is a house, an apartment, or other similar place of residence where a person usually sleeps and eats. It is generally a living unit with restricted access that contains a kitchen, bathroom, and sleeping facilities. The SCDE must be separate from any other living unit in the same building. A room in a hotel, dormitory, boarding house, or bunkhouse is not ordinarily considered to be a SCDE .

Usually, the GST/HST and PST applies on meals and accommodations you provide to an employee. In certain cases, such as long-term residential accommodation of one month or more, no GST/HST and PST applies. Where the GST/HST and PST does apply, include it in the value of the benefit.

Board and lodging at a special work site

You can exclude from income the value of board and lodging, or an allowance (not in excess of a reasonable amount) for board and lodging, that you provide to an employee who works at a special work site if all  of the following conditions are met:

• The employee's duties required them to be away from their principal place of residence or to be at the special work site
• The employee had to work at a special work site where the duties performed were of a temporary nature
• that, throughout the period, was available for the employee's occupancy, and the employee did not rent it to any other person
• to which, because of distance, the employee could not reasonably be expected to return daily from the special work site
• The board and lodging, or the allowance (not in excess of a reasonable amount) for board and lodging, you provided to the employee had to have been for a period of at least 36 hours. This period can include time spent travelling between the employee's principal place of residence and a special work site

You can only exclude from income an allowance (not in excess of a reasonable amount) paid to your employee for board and lodging if they incurred the expense.

Transportation

You can exclude from income the value of free or subsidized transportation, or an allowance (not in excess of a reasonable amount) for transportation expenses, that you provide to an employee who works at a special work site if all of the following conditions are met:

• the free or subsidized transportation, or the allowance, was for transportation between the special work site and your employee’s principal place of residence
• the employee’s duties required them to be away from their principal place of residence or be at the special work site for a period of at least 36 hours
• you (or a third party) provided board and lodging, or a reasonable allowance for board and lodging, to your employee for that period

Form TD4, Declaration of Exemption – Employment at a Special Work Site

If  all of the conditions listed under Board and lodging  noted above are met, you and the employee should fill out Form TD4, Declaration of Exemption – Employment at a Special Work Site . This allows you to exclude the benefit or allowance from the employee's income. If you fill out Form TD4, do not include the amounts in box 14, "Employment income," or in the "Other information" area under code  30 at the bottom of the employee's T4 slip. After you fill out Form TD4 with the employee, keep it with your payroll records.

If all of the above-noted conditions are not met, do not fill out Form TD4. Treat the total amounts as part of the employee's income. Make the necessary deductions and report the amounts on the employee's T4 slip. This also applies to any part of an allowance for board, lodging, and transportation that is more than a reasonable amount.

The CRA usually considers a work location to be remote when it is 80 kilometres or more from the nearest established community with a population of at least 1,000 people.

A location is considered an established community if it has essential services or those services are available within a reasonable commuting distance. Essential services may include access to:

• basic food store
• basic clothing store, with merchandise in stock (not a mail-order outlet)
• accommodation
• certain medical services
• certain educational facilities

Board and lodging at a remote work location

You can exclude from income the value of board and lodging, or an allowance (not in excess of a reasonable amount) for board and lodging that you provide to an employee who works at a remote work location , if all of the following conditions are met:

• The employee could not reasonably be expected to set up and maintain a self-contained domestic establishment because of the remoteness of the location and the distance from any established community
• You did not provide a self-contained domestic establishment for the employee
• The employee had to be away from their principal place of residence because of their duties
• The employee had to be at the remote work location

You can exclude from income the value of free or subsidized transportation, or an allowance (not in excess of a reasonable amount) for transportation expenses, that you provide to an employee who works at a remote work location if all of the following conditions are met:

• The employee’s duties required them to be away from their principal place of residence or to be at the remote work location for a period of at least 36 hours
• The free or subsidized transportation, or the allowance, was for transportation between the remote work location and any location in Canada. If the remote work location is outside Canada, you can exclude the allowance for transportation between that location and any location in Canada or outside Canada
• You (or a third party) provided board and lodging, or a reasonable allowance for board and lodging, to your employee for that period

If you need help determining whether a location qualifies as remote, see archived Interpretation Bulletin IT-91R4, Employment at Special Work Sites or Remote Work Locations .

When there is an exemption for board, lodging, or transportation allowances you pay to employees who work at a remote work location, do not fill out Form TD4 .

If you exclude a benefit for board, lodging, and transportation at a special work site or remote work location, it is not a taxable benefit. Do not deduct CPP contributions, EI premiums, or income tax.

If you provide your employee with a cell phone (or other handheld communication device) that you own, to help carry out their employment duties, the fair market value (FMV) of the cell phone or device is not a taxable benefit.

However, if you reimburse your employee for the cost of their own cell phone (or other handheld communication device), the FMV of the cell phone or device is considered a taxable benefit to the employee. This is the case even if the employee used, lost, or damaged the cell phone or device while carrying out their employment duties.

If you pay for, or reimburse the cost of an employee’s cell phone service plan, or Internet service at home to help carry out their employment duties, the portion used for employment purposes is not a taxable benefit.

If part of the use of the cell phone or Internet service is personal, you have to include the value of the personal use in your employee's income as a taxable benefit. The value of the benefit is based on the FMV of the service attributable to personal use, minus any amounts your employee reimburses you. You can only use your cost to calculate the value of the benefit if it reflects the FMV .

For cellular phone service only, the CRA does not consider your employee's personal use of the cellular phone service to be a taxable benefit if all of the following apply:

• the plan's cost is reasonable
• the plan is a basic plan with a fixed cost
• your employee's personal use of the service does not result in charges that are more than the basic plan cost

You, as the employer, are responsible for determining the percentage of employment use and the FMV .

If you give your employee an allowance for cellular phone or Internet services, the allowance must be included in the employee’s income.

For more information, go to Cellular phone and Internet services .

Child care is not taxable only if all of the following conditions are met:

• the services are provided at your place of business
• the services are managed directly by you
• the services are provided to all of the employees at minimal or no cost
• the services are not available to the general public, only to employees

If not all of the conditions are met, the taxable benefit is the fair market value (FMV) minus any amount that the employee pays for the service.

When you subsidize a facility operated by a third party in exchange for subsidized rates for your employees, the amount of the subsidy is considered a taxable benefit for the employee.

The fees you pay to provide services such as financial counselling or income tax preparation for an employee are usually considered a taxable benefit.

Employee counselling services are not taxable if they are for one of the following:

• an employee's re-employment
• an employee's retirement
• an employee's mental or physical health (such as counselling for tobacco, drug, or alcohol abuse, stress management or employee assistance programs) or that of a person related to an employee

This does not include amounts for using recreational or sporting facilities and club dues.

Disability-related employment benefits

If you provide benefits or allowances to an employee who has a disability, such as transportation costs or attendant services, the benefits may not be taxable.

Reasonable transportation costs between an employee's home and work location (including parking near that location) are not taxable if you pay them to or for an employee to whom either of the following applies:

• Is blind. (For more information, go to  Benefits provided to an employee who has a severe or prolonged impairment (disability) .
• Has a severe and prolonged mobility impairment, which markedly restricts the individual's ability to perform a basic activity of daily living (generally, someone who is eligible to claim the disability tax credit)

These transportation costs can include an allowance for taxis or specially designed public transit and parking that you provide or subsidize for these employees.

You may have employees with severe and prolonged mental or physical impairments. If you provide reasonable benefits for attendants to help these employees perform their duties of employment, these benefits are not taxable for the employee. The benefits can include readers for persons who are blind, signers for persons who are deaf, and coaches for persons who are intellectually impaired.

If you exclude a disability-related employment benefit from income, it is not a taxable benefit. Do not deduct CPP contributions, EI premiums, or income tax.

For more information, go to  Benefits provided to an employee who has a severe or prolonged impairment (disability) .

If you sell merchandise to your employee at a discount, the benefit they get from this is not usually considered a taxable benefit.

However, the CRA considers discounts to be taxable in all  of the following situations:

• you make a special arrangement with an employee or a group of employees to buy merchandise at a discount
• you make an arrangement that allows an employee to buy merchandise (other than old or soiled merchandise) for less than your cost
• you make a reciprocal arrangement with one or more other employers so that employees of one employer can buy merchandise at a discount from another employer

If you determine the discount is taxable or you sell merchandise to your employees  below cost , the taxable benefit is the difference between the fair market value of the goods and the price the employees pay.

Commissions that sales employees receive on merchandise they buy for personal use are not a taxable benefit. Similarly, when life insurance salespeople acquire life insurance policies, the commissions they receive are not taxable as long as they own the policies and have to make the required premium payments. This only applies where the income received is not significant and the insurance policy has no investment component or business use.

This policy does not apply to discounts on services.

Education benefits

If you provide education benefits to your employee, it may be a taxable benefit to the employee in certain circumstances.

If you provide education benefits to a person other than the employee, such as employee's family member, you do not have to include the value of the benefit in the employee's income as long as you deal at arm's length with the employee and the education benefit is not a replacement for salary, wages or other remuneration. Although scholarships, bursaries, and free tuition for family members are no longer a taxable benefit to employees, the benefit may be income to the family member. For more information, see Family members .

If you pay any amounts to an employee as an educational allowance for the employee's child, you have to include these amounts in the employee's income for the year.

However, if the employee and their family have to live in a specific location away from their home and the schools in the area do not meet the educational needs of the employee's children, the educational allowance may not be taxable if all of the following conditions are met:

• the education provided is in the official language of Canada primarily used by the employee
• the school is the closest suitable one available in that official language
• the child is in full-time attendance at the school
• the subsidy you provide is reasonable

Subsidized school services are generally taxable. However, in remote areas, employers are often responsible for essential community services that municipalities usually provide.

If you provide free or subsidized school services in remote areas for your employee's children, the employee does not receive a taxable benefit. Do not deduct CPP contributions, EI premiums, or income tax on these amounts.

This does not include an educational allowance or educational costs you pay directly to your employee, as explained elsewhere in this section.

You may provide an employee, or former employee, with a scholarship or bursary on the condition that the employee returns to employment with you on completing the course. In this situation, the amount of the scholarship or bursary is considered to be employment income for the employee or former employee.

You have to report on a T4 slip any scholarships, fellowships, or bursaries you gave to an employee if they primarily benefit the employee.

Specific employment-related training The CRA generally considers that courses taken to maintain or upgrade employment-related skills are mainly for your benefit when it is reasonable to assume that the employee will resume their employment for a reasonable period of time after they finish the course.

For example, tuition fees and other associated costs such as books, meals, travel, and accommodation that you pay for courses leading to a degree, diploma, or certificate in a field related to your employee's current or future responsibilities in your business are not a taxable benefit.

General employment-related training The CRA generally considers that other business-related courses, although not directly related to your own business, are taken mainly for your benefit.

For example, fees you pay for stress management, employment equity, first aid, and language courses are not a taxable benefit.

Personal interest training The CRA considers that courses for personal interest or technical skills not related to your business are taken mainly for the employee's benefit and, therefore, are a taxable benefit.

If you paid for, or reimbursed, your employee's tuition fees and there is no taxable benefit according to these guidelines, the tuition fees will not qualify for the tuition tax credit. You should inform your employee of this.

If you paid for, or reimbursed, education amounts that are reported on either a T4 or T4A slip, these amounts may be eligible for the scholarship exemption. The individual may be able to fully exclude from their income tuition fees, scholarships, fellowships, and bursaries they received from you.

Family members

If you offer a program that provides free or reduced tuition fees to the family members of your employees, do not include the value of any benefit the employee's family member receives in your employee's income unless:

• the benefit is provided as a substitute for salary, wages or other remuneration
• you do not deal with the employee at arm's length

Instead, report the FMV of the scholarship or bursary on a T4A slip for the family member. If a family member meets certain criteria, they may not have to include the amount in income on their income tax and benefit return.

The same applies if you are an educational institution offering free or discounted tuition to your employees’ family members.

If you get any questions, you can refer them to the Federal Income Tax and Benefit Guide .

As an employer, you may be eligible for a reduction in the employer EI premium rate that you use to calculate your share of the EI premiums if you offer income protection coverage, such as a wage loss replacement plan or other income maintenance plan, to your employees that reduce the EI benefits payable to an employee. For more information, go to  How to reduce the EI premium rate if you provide your employees with a short-term disability plan .

If you are granted an EI premium reduction, you will calculate your employer's EI premiums using a rate that is lower than the standard employer rate of 1.4 times the employees' EI premiums.

You have to return 5/12 of any savings to your employees in the year in which you received the EI premium reduction, or within the first four months of the following year. This savings can either be given to your employee in cash, such as a cash allowance or a cash rebate, or indirectly through increased employer contributions to an employee's health and welfare trust, group sickness or accident insurance plan, private health services plan, or in any other manner. These indirect benefits will only be tax-free (i.e. not included in the employee's employment income) if they are given to the employee in the form of a benefit specifically exempt from taxation under paragraph 6(1)(a) of the Income Tax Act .

If the benefit is taxable, you must include it in your employee's income in the year the employee received it. For more information, see Benefits chart .

Gifts, awards, and long-service awards

A gift or an award that you give an employee is a taxable benefit from employment, whether it is cash, near-cash, or non-cash. However, the CRA has an administrative policy that exempts non-cash gifts and awards in some cases.

Cash and near-cash gifts or awards are always a taxable benefit for the employee. A near-cash item is one that functions as cash, or an item that can be easily converted to cash, such as gold nuggets, securities, or stocks. For more information, see Rules for gifts and awards and Policy for non-cash gifts and awards , or go to Gifts, awards, and long-service awards .

Example of a near-cash gift or an award

You give your employee a $100 gift card or gift certificate to a department store. The employee can use this to purchase whatever merchandise or service the store offers. The CRA considers the gift card or gift certificate to be an additional remuneration that is a taxable benefit for the employee because it functions in the same way as cash.

Examples of non-cash gifts or awards

You give your employee tickets to an event on a specific date and time. This may not be a taxable benefit for the employee since there is no element of choice, if the other rules for gifts and awards are met.

You give your employee a voucher (which may be a ticket or a certificate) that entitles the employee to receive an item for a set value at a store. For example, you may give your employees a voucher for a turkey valued up to $30 as a Christmas gift, and for convenience, you arrange for your employees to go to a particular grocery store and exchange the voucher for a turkey. The employees can only use the voucher to receive a turkey valued up to $30 (no substitutes).

Vouchers and event tickets are generally considered non-cash gifts and awards.

A gift has to be for a special occasion such as a religious holiday, a birthday, a wedding, or the birth of a child.

An award has to be for an employment‑related accomplishment such as outstanding service, or employees’ suggestions. It is recognition of an employee’s overall contribution to the workplace, not recognition of job performance. Generally, a valid, non‑taxable award has clearly defined criteria, a nomination and evaluation process, and a limited number of recipients.

An award given to your employees for performance‑related reasons (such as performing well in the job they were hired to do, exceeding production standards, completing a project ahead of schedule or under budget, putting in extra time to finish a project, covering for a sick manager or colleague) is considered a reward and is a taxable benefit for the employee.

If you give your employee a non‑cash gift or an award for any other reason, this policy does not apply and you have to include the fair market value of the gift or award in the employee’s income.

The gifts and awards policy does not apply to cash and near‑cash items or to gifts or awards given to non‑arm’s length employees, such as your relatives, shareholders, or people related to them.

For more information on gifts and awards outside the CRA’s policy, go to Gifts and awards outside our policy and Policy for non-cashgifts and wards, or go to What is a taxable benefit .

Use the fair market value (FMV) of each gift to calculate the total value of gifts and awards given in the year, not its cost to you. You have to include the value of the GST/HST and PST in the FMV.

You may give an employee an unlimited number of non-cash gifts and awards with a combined total value of $500 or less annually. If the FMV of the gifts and awards you give your employee is greater than $500, the amount over $500 must be included in the employee's income. For example, if you give gifts and awards with a total value of $650, there is a taxable benefit of $150 ($650 – $500).

Items of small or trivial value do not have to be included when calculating the total value of gifts and awards given in the year for the purpose of the exemption. Examples of items of small or trivial value include:

• coffee or tea
• T-shirts with employer's logos
• plaques or trophies

Under the CRA's administrative policy, if you provide your employee with gift cards, the gift cards is considered non-cash if all the following apply:

• It comes with money already on it and can only be used to purchase goods or services from a single retailer or a group of retailers identified on the card
• The terms and conditions of the gift card clearly state that amounts loaded to the card cannot be converted into cash
• Name of the employee
• Date the gift card was provided to the employee
• Reason for providing the gift card (part of social event, gift or award)
• Type of gift card
• Amount of the gift card
• Name of the retailer(s)

This includes gift certificates, chip cards and electronic gift cards. If the gift card meets all these conditions, it is considered non-cash for the purpose of the CRA's administrative policy and can be used to provide gifts and awards as part of the $500 limit. If the card does not meet these conditions, it is considered a near-cash benefit and is taxable.

You must review the terms and conditions of the gift card to make sure it meets the conditions of the CRA's administrative policy above. You must complete this review on a case by case basis.

As well as the gifts and awards in the policy stated above, you can, once every five years, give your employee a non-cash long-service or anniversary award valued at $500 or less, tax free. The award must be for a minimum of five years' service, and it has to be at least five years since you gave the employee the last long-service or anniversary award. Any amount over the $500 is a taxable benefit.

If it has not been at least five years since the employee's last long-service or anniversary award, then the award is a taxable benefit. For example, if the 15-year award was given at 17 years of service, and then the next award is given at 20 years of service, the 20-year award will be a taxable benefit, since five years will not have passed since the previous award.

The $500 exemption for long-service awards does not affect the $500 exemption for other gifts and awards in the year you give them. For example, you can give an employee a non-cash long-service award worth $500 in the same year you give them other non-cash gifts and awards worth $500. In this case, there is no taxable benefit for the employee.

If the value of the long-service award is less than $500, you cannot add the shortfall to the annual $500 exemption for non-cash gifts and awards.

For more information, go to  Rules for gifts and awards .

If a manufacturer of goods gives cash awards or non-cash awards to the dealer of the goods, the manufacturer does not have to report the awards on an information slip.

However, if the dealer passes on cash awards to an employee, the dealer has to report the cash payment in box 14, "Employment income," and in the "Other information" area under code  40 at the bottom of the employee's T4 slip. If the dealer passes on non-cash awards to an employee, the dealer may not have to report the awards in the employee's income if the other conditions of the awards' policy are met.

If a manufacturer gives a cash award or a non-cash award directly to the employee of a dealer or other sales organization, the manufacturer has to report the value of the award as a benefit using code  154 , "Cash award or prize from payer," in the "Other information" area at the bottom of the T4A slip.

Group term life insurance policies – Employer-paid premiums

This section applies to current, former, and retired employees.

Premiums you pay for employees' group life insurance that is not group term insurance or optional dependant life insurance are also a taxable benefit.

A group term life insurance policy is one for which the only amounts payable by the insurer are policy dividends, experience rating refunds, and amounts payable on the death or disability of an employee, former employee, retired employee, or their covered dependants.

Term insurance is any life insurance under a group term life insurance policy other than insurance for which a lump-sum premium has become payable or has been paid. Life insurance for current employees would usually be term insurance, although it is sometimes provided for retired employees.

A lump-sum premium is a premium for insurance on an individual's life where all or part of the premium is for insurance for a period that extends more than 13 months after the payment of the premium (or more than 13 months after the time the premium became payable, if it is paid after it became payable).

If the premiums are paid regularly and the premium rate for each individual does not depend on age or gender, the benefit is:

• the premiums payable for term insurance on the individual's life
• the total of all sales taxes and excise taxes, excluding GST/HST that apply to the individual's insurance coverage
• any provincial insurance levies or sales tax (8% for Ontario, 7% for Manitoba, and 9% for Quebec) that employers have to pay on some insurance premiums
• the premiums and any taxes the employee paid either directly or through reimbursements to you

In any other situation, a detailed calculation is required. For more information, call  1-800-959-5525 .

Report the benefit for current employees and employees who are on a leave of absence (such as maternity leave) in box 14, "Employment income," and in the "Other information" area under code  40 at the bottom of the employee's T4 slip.

Except as indicated in the next paragraph, for former employees or retirees, report the benefit on a T4A slip using code 119 in the "Other information" area, regardless of the amount. The $500 reporting threshold for T4A slips, which is described on When to file information returns ", does not apply.

If you are the administrator or trustee of a multi-employer plan and you provided taxable benefits under the plan to employees, former employees, or retirees, report the benefit using code  119 in the "Other information" area at the bottom of the T4A slip if it is more than $25.

Effective January 2018, employers who pay Group Term Life Insurance premiums on behalf of retirees, when it’s the only income reported on the T4A slip, are only required to report the premium if the amount is greater than $50. Your former employees are still responsible for reporting the amount on their personal income tax and benefits return.

Housing or utilities

If the accommodation you provide to the employee is in a prescribed zone, see Accommodation or utilities provided by the employer .

If your employee is a member of the clergy or a religious order or a regular minister of a religious denomination, they might be entitled to claim a clergy residence deduction. For more information, see Clergy residence .

If you provide an employee, including the superintendent of an apartment block, with a house, apartment, or similar accommodation rent free or for less than the fair market value (FMV) of such accommodation, there is a taxable benefit for the employee.

You have to estimate a reasonable amount for the housing benefit. It is usually the FMV for the same type of accommodation, minus any rent the employee paid.

In addition, the amount you pay on behalf of, or reimburse to your employee for utilities (such as telephone, hydro, natural gas, water, cable or internet) is also a taxable benefit. This is the amount that you include in the employee's income as a utilities benefit.

If the employee occupies the accommodation for at least one month, the value of the accommodation is usually not subject to the GST/HST.

Special circumstances that reduce the value of a housing benefit

The following two factors may reduce the value of a housing benefit you provide to your employee:

• Suitability of size Your employee may have to occupy an accommodation that is larger than they need (such as a single person in a three-bedroom house). To calculate the taxable housing benefit, you can reduce the value of the accommodation to equal the value of accommodation that is appropriate to your employee's needs (in this case, a one or two-bedroom apartment or house).

If the accommodation you provide is smaller than your employee needs, the CRA does allow any reduction in value.

• Loss of privacy and quiet enjoyment If the accommodation you provide to your employee contains things like equipment, public access, or storage facilities that infringe on your employee's privacy or quiet enjoyment of the accommodation, you can reduce the value of the housing benefit. The reduction has to reasonably relate to the degree of disturbance that affects your employee.

These two factors apply in the above order. If both circumstances apply to an accommodation, you should first reduce the value to equal the value of accommodation that suits your employee's needs. Then, you should apply any reduction for loss of privacy and quiet enjoyment to that reduced value.

If you give your employee an allowance to pay for rent or utilities, include the allowance in your employee's income as a taxable housing or utilities benefit.

Report the taxable benefit for the utilities in box 14, "Employment income," and in the "Other information" area under code 40 at the bottom of the employee's T4 slip. Report the taxable benefit for housing in box 14 and in the "Other information" area under code 30 .

Special rules apply if you pay for utilities (or provide them) for a member of the clergy. You must add eligible utilities (electricity, heat, water, and sewer) for clergy members to the taxable benefit for housing under code 30 . Report all other utilities under code  40 .

For more information, go to Fill out the slips and summaries .

Clergy residence deduction

If your employee is a member of the clergy, they may be able to claim a deduction from income for their residence when filing a personal income tax and benefits return.

An employee who is a member of the clergy, a regular minister, or a member of a religious order can claim the clergy residence deduction if the employee is in one of the following situations:

• in charge of, or ministers to, a diocese, parish, or congregation
• engaged only in full-time administrative service by appointment of a religious order or denomination

To claim the deduction, the employee has to fill out parts A and C of Form T1223, Clergy Residence Deduction . You have to fill out Part B and sign the form to certify that this employee has met the required conditions. The employee does not have to file the form with their income tax and benefit return, but has to keep it in case the CRA asks to see it.

Reducing remuneration from which you have to deduct income tax and CPP

Employer provided or paid – benefit.

If you provide your employee with free or low-rent accommodation, do not include the accommodation and utilities share of the benefit that is equal to the clergy residence deduction, in your employee's income when you calculate the income tax and CPP contributions to deduct as long as your employee does both of the following:

• gives you a completed Form T1223, Clergy Residence Deduction
• tells you in writing they intend to claim the clergy residence deduction and tells you the amount of the deduction that will be claimed

Employee owned or rented – allowance

Your employee may own or rent the accommodation and pay for utilities either out of their own money or by using the allowance you paid to them. If your employee will be claiming the clergy residence deduction on their personal income tax and benefits return, they may get a letter of authority from a tax services office to reduce the income on which you have to deduct tax and CPP. When your employee provides you with a letter of authority from a tax services office, reduce the income by the amount stated in the letter.

Although the clergy residence deduction and the utilities share of the benefit can be excluded from income for the purpose of calculating tax deductions and CPP, you still have to report it on your employee's T4 slip. Special rules apply if you pay for utilities (or provide them) for a member of the clergy. For more information, go to Fill out the slips and summaries .

For more information, see archived Interpretation Bulletin IT-141R, Clergy Residence Deduction .

Income maintenance plans and other insurance plans

Employers may offer various types of insurance plans to employees. The tax treatment of employer-paid premiums or contributions to these plans may differ depending on the nature of the plan, the type of benefits offered, and whether the plan is offered to individual employees (a non-group plan) or a group of employees (a group plan).

The premium or contribution is a taxable benefit if you pay it to a non-group plan that is:

• a sickness or accident insurance plan
• a disability insurance plan
• an income maintenance insurance plan

Premiums or contributions you pay to a group sickness or accident insurance plan are a taxable benefit to your employee, unless it is in respect of a wage-loss replacement benefit payable on a periodic basis (not lump-sum). Examples of plans where the premium is a taxable benefit include, but are not limited to, accidental death and dismemberment and critical illness insurance.

Include the taxable benefit in box  14 , “Employment income,” and in the “Other information” area under code  40 at the bottom of the employee’s T4 slip. Report the retiree's taxable benefit using code  028 , "Other income" in the "Other information" area at the bottom of the T4A slip.

If the plan is an employee-pay-all plan, any premium you pay on behalf of the employee, and any reimbursements made to your employee, are considered taxable benefits. A plan is an employee-pay-all plan where your employee is contractually responsible for paying the premiums to the third party that administers the plan, even where the plan allows you to pay the premiums on the employee's behalf and include the value of the premiums in your employee's income.

For more information on employee-pay-all plans, go to CPP/EI Explained  and choose " Wage Loss Replacement Plans " or see archived Interpretation Bulletin IT-428, Wage Loss Replacement Plans .

Under subsection 6(17) of the Income Tax Act (ITA), a top up disability payment includes a payment made by an employer directly to an individual to replace all or part of the periodic payments that, because of an insurer's insolvency, are no longer being made to the individual under a disability policy for which the employer made contributions. This treatment allows the continued deduction of contributions made by the employee to be considered in determining the amount to be included in the employee's income from employment under paragraph 6(1)(f) of the ITA. This applies to any top up disability payment made after August 10, 1994.

A disability policy is a group disability insurance policy that provides periodic payments to individuals for lost employment income.

Loans – interest-free and low-interest

You may have to include in income any benefit arising from an interest-free or low-interest loan received, or debt incurred, by a person because of  an office, employment, or shareholding .

If a person is both an employee and a shareholder, it is a question of fact whether a particular indebtedness arose because of shareholdings or because of an office or employment. For more information, see archived Interpretation Bulletin IT-119R4, Debts of Shareholders and Certain Persons Connected with Shareholders . 

The benefit is generally calculated as the amount of interest that the person would have paid on the loan or debt for the year at the prescribed rates (for more information, see Prescribed interest rates ), minus the amount of interest that they paid on the loan in the year or no later than 30 days after the end of the year.

Special rules apply to certain loans or debt and to home-relocation loans. For more information, see Exceptions below and Home-relocation loans .

A taxable benefit will not arise where a person receives a loan or incurs a debt because of an office, employment, or shareholding when either of the following occurs:

• The interest rate on the loan or debt equals, or is more than, the rate that would have been agreed upon in an arm's length transaction at the time the loan or debt arose if the creditor's ordinary business included the lending of money. This exception does not apply if someone other than the borrower pays any part of the interest from the loan or debt
• You include all or part of the loan or debt (such as, a loan or debt forgiven in whole or in part) in the income of a person or partnership. See Forgiven loans  for more information. Where only part of the loan or debt has been included in income, an interest benefit must still be calculated for the portion of the loan or debt that remains outstanding

Arm’s length  refers generally to persons that are not related. 

An employee receives a taxable benefit if you give any person or partnership a loan because of the employee's current, previous, or intended office or employment. The CRA considers a loan received because of employment if it is reasonable to conclude that the loan would not have been received, or the terms of the loan would have been different, had there been no current, previous, or intended employment.

The loan can be received by the employee or any other person or partnership, including, for example, the employee's spouse. A benefit can also arise from any other indebtedness such as the unpaid purchase price of goods or services, or an overpayment of salary that your employee repays you over a period of time.

The taxable benefit the employee receives in the tax year is the total of the following amounts:

• the interest on each loan and debt calculated at the prescribed rate for the periods in the year during which it was outstanding
• the interest on the loan or debt that was paid or payable for the year by you, the employer (for this purpose, an employer is a person or partnership that employed or intended to employ the individual and also includes a person related to the person or partnership)

minus the total of the following amounts:

c. the interest for the year that any person or partnership paid on each loan or debt no later than 30 days after the end of the year d. any part of the amount in b) that the employee pays back to the employer no later than 30 days after the end of the year

Sometimes these rules do not apply. For more information, see Exceptions .

If the employee receives a taxable benefit on a loan or debt because of employment, report the benefit in box 14 , “Employment income,” and in the “Other information” area, report the interest benefit under code 36 . Report any forgiven loan principal amounts under code 40 .

For information about similar taxable benefits resulting from loans received because of services performed by a corporation that carries on a personal services business, see archived Interpretation Bulletin IT-421R, Benefits to individuals, corporations and shareholders from loans or debt .

Joshua is your employee. He borrowed $150,000 from you at the beginning of the year. The prescribed rate of interest for the loan is 3% for the first quarter, 4% for the second and third quarters, and 5% for the fourth quarter. Joshua paid you $2,000 interest on the loan no later than 30 days after the end of the year. During the year, a company related to you paid $1,000 interest on the loan for Joshua. Before the end of the same year, Joshua repaid the $1,000 to the company.

Calculate the benefit to include in his income as follows:

Prescribed rate × loan amount for the year: 3% × $150,000 × 1/4 = $1,125 4% × $150,000 × 2/4 = $3,000 5% × $150,000 × 1/4 = $1,875

Amount paid by a third party

Interest paid ($2,000 + $1,000) =

Amount Joshua repaid

Joshua's taxable benefit

Persons and partnerships are generally taxable on benefits received from a corporation of which they are a shareholder. Depending on the particular facts, where a person or partnership receives a loan or incurs a debt because of a shareholding:

• the amount of the loan or debt may be required to be included in the income of the person or partnership. For more information, see archived Interpretation Bulletin IT-119R4, Debts of Shareholders and Certain Persons Connected with Shareholders
• a taxable benefit may arise if no interest or a low rate of interest is charged on the loan or debt. These rules are explained in more detail below

A taxable benefit does not apply if the loan or debt is required to be included in the income of a person or partnership.

Therefore, a person or partnership should determine if the amount of the loan or debt is required to be included in income before considering whether a taxable benefit may arise. A taxable benefit cannot be included in income voluntarily to avoid any requirement to include the amount of a loan or debt in income.

Loans received or debts incurred because of shareholdings may give rise to a taxable benefit when all of the following conditions are met:

• the loan is received, or the debt is incurred, by a person or partnership (except when the person is a corporation resident in Canada or the partnership is one in which each partner is a corporation resident in Canada)
• a shareholder of a corporation
• connected with a shareholder of a corporation
• a member of a partnership or beneficiary of a trust that was a shareholder of a corporation
• the corporation,
• a corporation related to that corporation
• a partnership of which the corporation or the related corporation was a member

If these conditions are met, the person or partnership (for example, a shareholder) is considered to receive a benefit in the tax year that is equal to:

• the interest on the outstanding portion of each loan and debt calculated at the prescribed rate for the period in the year during which it was outstanding

the interest for the year that any party (such as the person or partnership) paid on each loan or debt in the year or no later than 30 days after the end of the year

A person may be an individual, a corporation, or a trust.

The calculation of the benefit is modified where one or more such loans are considered to have been made under a back-to-back shareholder loan arrangement. For more information on back-to-back shareholder loans, see pages 54 and 55 of Tax Measures: Supplementary Information for Budget 2016 on the Department of Finance Canada pages of Canada.ca .

Include the shareholder's benefit under code 117 , "Other income," in the "Other information" area at the bottom of the T4A slip.

A home-purchase loan is any part of a loan to an employee that the employee used to get or repay another loan to buy a residence. The residence has to be for that employee or a person related to that employee. This also applies to a shareholder or a person related to a shareholder.

To calculate the benefit for a home-purchase loan, see Loans received because of employment .

Once a home-purchase loan is established, the prescribed interest rate remains in effect for a period of five years. The amount of interest you calculate as a benefit should not be more than the interest that would have been charged at the prescribed rate when the loan or the debt was established.

If the term of repayment for a home-purchase loan is more than five years, the balance owing at the end of five years (from the day the loan was made) is considered a new loan. Treat the outstanding balance as a new loan on that date. To calculate the benefit, use the prescribed rate in effect at that time.

A home-relocation loan is a loan you give to an employee or an employee's spouse or common-law partner when they meet all of the following conditions:

• The employee or the employee's spouse or common-law partner moves to start work at a new location in Canada
• The employee or the employee's spouse or common-law partner uses the loan to buy a new residence that is at least 40 kilometres closer to the new work location than the previous home
• The employee or the employee's spouse or common-law partner receives the loan because of the employee's employment
• The employee designates the loan as a home-relocation loan
• The loan is used to acquire a residence or a share of the capital stock of a co-operative housing corporation acquired only to obtain the right to inhabit a residence owned by the corporation. The residence must be for the habitation of the employee and be their new residence

Only a debt that is a loan can be a home relocation loan.

To calculate the benefit for the home-relocation loan, see  Loans received because of employment .

Include the amount of the taxable benefit in box 14, "Employment income," and in the "Other information" area under code  36  at the bottom of the employee's T4 slip.

The amount of interest you calculate as a benefit should not be more than the interest that would have been charged at the prescribed rate in effect when the employee received the loan.

If the term of repayment for the home-relocation loan is more than five years, the balance owing at the end of five years (from the day the loan was made) is considered a new loan. Treat the outstanding balance as a new loan on that date. To calculate the benefit, use the prescribed rate in effect at that time.

For 2018 and later tax years, the home-relocation loan deduction has been eliminated.

A loan to an employee may be partly or fully forgiven (the employee does not have to repay the loan). In either case, the forgiven amount is considered employment income and is added to the employee's T4 slip for the year the amount is forgiven. For more information, see archived Interpretation Bulletin IT-421R2, Benefits to individuals, corporations and shareholders from loans or debt .

If an employee or any person or partnership receives a loan or incurs a debt because of the employee's employment, report the benefit in box 14, "Employment income," and in the "Other information" area under code 36 at the bottom of the employee's T4 slip.

If a person or partnership that was a shareholder (or was related to a shareholder) receives a loan or incurs a debt, you generally have to report the benefit on a T4A slip. Enter the amount under code 117 , "Loan benefits," in the "Other information" area at the bottom of the T4A slip.

The taxable benefit must be reported on a T4 or T4A slip even if the borrower is eligible to deduct the interest.

To get the current prescribed rates of interest, go to Prescribed interest rates .

Your employees may collect loyalty points, such as frequent flyer points or air miles, on their personal credit cards when travelling on business trips, even though you reimburse them for the amounts they spend. Usually, these points can be exchanged or cashed in for rewards (goods or services, including gift cards and certificates).

Your employees do not have to include in their income the value of the rewards they received or enjoyed from the points they collect on these business trips, unless any of the following apply:

• The points are converted to cash
• The plan or arrangement between you and the employee seems to be a form of remuneration
• The plan or arrangement is a form of tax avoidance

If any of the conditions above are met, the employee has to declare the fair market value (FMV) of any personal rewards they received on an income tax and benefit return.

If you control the points (such as when an employee uses a company credit card) you have to report on their T4 slip the  FMV of any personal rewards they received from redeeming the points.

For examples of situations where loyalty and other points programs are considered taxable benefits, go to  Loyalty or other points programs .

If you provide overtime meals, or an allowance for overtime meals, there is no taxable benefit if all of the following conditions apply:

• The allowance, or the cost of the meal, is reasonable. The CRA generally considers a value of up to $23 (including the GST/HST and PST) to be reasonable. The CRA will consider higher amounts reasonable if the relative cost of meals in that location is higher, or under other significant extenuating circumstances
• The employee works two or more hours of overtime right before or right after their scheduled hours of work
• The overtime is not frequent and is occasional in nature (usually less than three times a week)

If overtime occurs frequently or becomes the norm, the CRA considers the overtime meals or allowances to be a taxable benefit, since they start to take on the characteristics of additional remuneration.

For examples of situations where overtime meals, or allowances for overtime meals, are considered taxable benefits, go to Examples – Overtime meals or allowances .

If you provide subsidized meals to an employee (such as in an employee dining room or cafeteria), these meals are not considered a taxable benefit if the employee pays a reasonable charge. A reasonable charge is one that covers the cost of the food, its preparation, and service.

If the charge is not reasonable, the value of the benefit is the cost of the meals, minus any payment the employee makes.

Include the taxable benefit in box 14, "Employment income," and in the "Other information" area under code 40 at the bottom of the employee's T4 slip.

If you pay or provide an amount to pay for an employee's medical expenses in a tax year, these amounts are considered to be a taxable benefit for the employee.

Generally, there is no GST/HST and PST to include in the value of this benefit. However, some medical expenses that qualify for the medical expense tax credit may be subject to the GST/HST and PST. In such a case, include the GST/HST and PST in the value of the benefit.

For more information on qualifying medical expenses, go to:

• Benefits provided to an employee who has a severe or prolonged impairment (disability)
• Private Health Services Plan

Moving expenses and relocation benefits

When you transfer an employee from one of your places of business to another, the amount you pay or reimburse the employee for certain moving expenses is usually not a taxable benefit. This includes any amounts you incurred to move the employee, the employee's family, and their household effects. This also applies when the employee accepts employment at a different location from the location of their former residence. The move does not have to be within Canada.

Also, if you pay certain expenses to move an employee, their family, and their household effects out of a remote work location when their employment duties are finished, the amount you pay is not a taxable benefit.

If you paid allowances to your employee for incidental moving expenses that they do not have to account for, see  Non-accountable moving allowances .

The following expenses are not a taxable benefit to your employees if you paid or reimbursed them:

• the cost of house-hunting trips to the new location, including child care and pet care expenses while the employee is away
• travelling costs (including a reasonable amount spent for meals and lodging) while the employee and members of the employee's household were moving from the old residence to the new residence
• the cost to the employee of transporting or storing household effects while moving from the old residence to the new residence
• costs to move personal items such as automobiles, boats, or trailers
• charges and fees to disconnect telephones, television or aerials, water, space heaters, air conditioners, gas barbecues, automatic garage doors, and water heaters
• fees to cancel leases
• the cost to the employee of selling the old residence (including advertising, notarial or legal fees, real estate commission, and mortgage discharge penalties)
• charges to connect and install utilities, appliances, and fixtures that existed at the old residence
• adjustments and alterations to existing furniture and fixtures to arrange them in the new residence, including plumbing and electrical changes in the new residence
• automobile licences, inspections, and drivers' permit fees, if the employee owned these items at the former location
• legal fees and land transfer tax to buy the new residence
• the cost to revise legal documents to reflect the new address
• reasonable temporary living expenses while waiting to occupy the new, permanent accommodation
• long-distance telephone charges that relate to selling the old residence
• amounts you paid or reimbursed for property taxes, heat, hydro, insurance, and grounds maintenance costs to keep up the old residence after the move, when all reasonable efforts to sell it have not been successful

If you pay or reimburse moving costs that the CRA does not list above, the amounts are generally considered a taxable benefit to the employee.

If you do not reimburse, or only partly reimburse, an employee for moving expenses, the employee may be able to claim some of the moving expenses when filing their income tax and benefit return.

For more information on the deduction for moving expenses that is available to your employees, go to  Moving expenses and relocation benefits .

Housing loss

If you pay or reimburse your employee for a housing loss, the amount is a taxable benefit for the employee.

However, there is an exception for amounts paid for an eligible housing loss . Generally, in these situations, only half of the amount that is more than $15,000 is taxable.

If you spread the payment over two years, you will need to include an amount on your employee's T4 slip for each year. Example 2 below shows how to calculate the taxable benefit.

In March 2023 , you compensated Clara, your employee, for a $40,000 loss she incurred on the sale of her house. The loss was an eligible housing loss. Clara started to work at her new workplace in June  2023 .

The taxable benefit you will report on Clara's 2023 T4 slip will be $12,500, calculated as follows:

½ × ($40,000 − $15,000)

In June 2022 , you agreed to compensate Paul, your employee, for any eligible housing loss incurred on the sale of his house. Paul started to work at his new work location on December 1, 2022 .

Paul's eligible housing loss amounted to $65,000. You paid out the compensation in two payments: $30,000 in September 2022 and $35,000 in February 2023 .

Paul's taxable benefit in 2023 was $7,500 (half of the amount paid in 2022 that is more than $15,000).

Paul's taxable benefit in 2023 is $17,500. This is calculated as follows:

• half of the total of amounts paid in 2022 and 2023 that is more than $15,000 (½ × [$65,000 − $15,000] = $25,000)
• the amount included in income in 2022 ($7,500)

For more information on housing losses, go to  Moving expenses and relocation benefits .

A non-accountable moving allowance is an allowance for which an employee does not have to provide details or submit receipts to justify amounts paid. The CRA considers a non-accountable moving allowance for incidental relocation or moving expenses of $650 or less to be a reimbursement of expenses that the employee incurred because of an employment-related move. Therefore, this type of allowance is not taxable. For the CRA to consider it as a reimbursement for incidental expenses, the employee has to certify in writing that they incurred expenses for at least the amount of the allowance, up to a maximum of $650 .

Do not report the amount of the reimbursement. Report any part of the non-accountable moving allowance that is more than $650 in box 14, "Employment income," and in the "Other information" area under code  40 at the bottom of the employee's T4 slip.

If you gave a non-accountable moving allowance of $625 to an employee who certifies that they incurred expenses for the amount of the allowance, the employee will not be taxed on the amount received. Do not include this amount on the employee’s T4 slip.

If you gave a non-accountable moving allowance of $750 to an employee who can certify the expenses, they will be taxed on $100 only, which is the part of the amount that is more than $650. Include the $100 on a T4 slip in box 14, "Employment income," and in the "Other information" area under code  40 at the bottom of the employee’s T4 slip.

A municipal corporation or board may pay a non-accountable expense allowance to an elected officer to perform the duties of that office.

For 2019 and later tax years, the full amount of this non-accountable allowance is a taxable benefit. Enter it in box 14 , “Employment income,” and in the “Other information” area under code 40 at the bottom of the employee’s T4 slip .

Employer-provided parking is usually a taxable benefit for an employee, whether or not the employer owns the lot. The amount of the benefit is based on the fair market value of the parking, minus any payment the employee makes to use the space.

There are some exceptions to the taxability of parking:

• If your employee has a disability, the parking benefit is generally not taxable. For more information, see Disability-related employment benefits
• you provide parking to your employee for business purposes
• your employee regularly has to use their own automobile or one you usually supply to do their duties

Travel between work and home is not considered travel for business purposes.

The CRA does not require you to include a benefit in your employee's income in the following situations:

• A business operates from a shopping centre or industrial park where parking is available to both employees and other people
• Not more than two parking spaces available for every three employees who want parking (scramble parking)
• Parking spaces are not assigned (random or uncertain)
• Parking spaces are offered to all employees who want parking

For more information on scramble parking, go to Parking .

If you provide enough parking spaces for all employees who want parking, but do not assign the parking spaces to individual employees, this is not scramble parking. You must add the benefit to the employee's remuneration.

To determine if an employee has received a benefit, the facts of each case must be examined. If you are not sure if employer-provided parking is a taxable benefit, contact the CRA.

You can answer a series of questions on our Web site to help you determine if there is a taxable benefit. For more information, go to  Parking .

Contributions you make to a PRPP for your employees are not a taxable benefit if the plan has been accepted for registration by the Minister of National Revenue and that registration has not been revoked. Do not include these contributions in your employees’ employment income.

On the other hand, if you contribute to a plan that is registered under the Pooled Registered Pension Plan Act or a similar provincial act and  not with the Minister of National Revenue, your contributions are a taxable benefit. They are considered to be paid in cash and are taxable, pensionable, and insurable. Deduct income tax, CPP contributions, and EI premiums.

For more information about PRPPs, go to The Pooled Registered Pension Plan (PRPP) .

If you are an employer in the forestry business, you may have employees who, according to their contracts, have to use their own power saws or tree trimmers at their own expense.

Rental payments you make to employees for the use of their own power saws or tree trimmers are taxable benefits and should be included in their income on a T4 slip. Their income should not be reduced by the cost or value of saws, trimmers, parts, gasoline, or any other materials the employee supplies.

Premiums under provincial hospitalization, medical care insurance, and certain Government of Canada plans

You may be paying premiums or contributing to a provincial or territorial hospital or medical care insurance plan for an employee. The amount you pay is considered a taxable benefit for the employee. Report this benefit in box 14, "Employment income," and in the "Other information," area under code  40 at the bottom of the employee's T4 slip. If you have to make payments to such a plan for amounts other than premiums or contributions for the employee, they are not considered a taxable benefit for the employee.

If you are the former employer of an employee who has retired, any amount you pay as a contribution to a provincial or territorial health services insurance plan for the retired employee is a taxable benefit.

Report this benefit under code  118 , "Medical premium benefits," in the "Other information" area at the bottom of the T4A slip.

Any amount that the federal government pays for premiums under a hospital or medical care insurance plan for its employees and their dependants serving outside Canada is a taxable benefit. This also applies to dependants of members of the Royal Canadian Mounted Police and the Canadian Forces serving outside Canada.

If you make contributions to a private health services plan (such as medical or dental plans) for employees, there is no taxable benefit for the employees.

Employee-paid premiums to a private health services plan are considered qualifying medical expenses and can be claimed by the employee on their income tax and benefit return.

Include the amounts that the employee paid on a T4 slip in the "Other information" area under code  85 . The use of code  85 is optional. If you do not enter code  85 , the CRA may ask the employee to provide supporting documents.

Use the T4A slip to report these amounts for former employees or retired employees. Enter the amount under code  135 , "Recipient-paid premiums for private health services plans," in the "Other information" area at the bottom of the T4A slip.

For more information on private health services plans, go to  Private Health Services Plan and see archived Interpretation Bulletin IT-339R2, Meaning of private health services plan (1988 and subsequent taxation years) .

If you pay professional membership dues for your employee and you are the primary beneficiary of the payment, there is no benefit for the employee.

Whether you or the employee is the primary beneficiary is a question of fact. If you pay or reimburse professional membership dues because membership in the organization or association is a condition of employment, the CRA considers you to be the primary beneficiary and there is no taxable benefit for the employee.

When membership is not a condition of employment, you, as the employer, are responsible for determining the primary beneficiary. You have to be prepared to justify your position if the CRA ask you to do so.

In all situations where you pay or reimburse an employee's professional membership dues and the primary beneficiary is the employee, there is a taxable benefit for the employee.

You should tell your employee that they cannot deduct from their employment income any non-taxable professional dues that you have paid or reimbursed to them.

For more information, see archived Interpretation Bulletin IT-158R2, Employees' professional membership dues .

The use of a recreational facility or club is a taxable benefit for an employee in any of the following situations:

• You pay, reimburse, or subsidize the cost of a membership at a recreational facility, such as an exercise room, swimming pool, or gymnasium
• You pay, reimburse, or subsidize the cost of memberships to a business or professional club (that operates fitness, recreational, sports, or dining facilities for the use of their members but their main purpose is something other than recreation)
• You pay, reimburse, or subsidize the cost of membership dues in a recreational facility of the employee's choice, up to a set maximum. In this case it is the employee who has paid for the membership, owns it, and has signed some kind of contract with the company providing the facility
• You pay, reimburse, or subsidize the employee for expenses incurred for food and beverages at a restaurant, dining room lounge, banquet hall, or conference room of a recreational facility or club
• You provide recreational facilities to a select group or category of employees for free or for a minimal fee, while other employees have to pay the full fee. There is a taxable benefit for employees who do not have to pay the full fee

However, the use of a recreational facility or club does not result in a taxable benefit for an employee in any of the following situations:

• You provide an in-house recreational facility and the facility is available to all your employees. This applies whether you provide the facilities free of charge or for a minimal fee
• You make an arrangement with a facility to pay a fee for the use of the facility, the membership is with you and not your employee and the facility or membership is available to all your employees. Membership will be considered to be made available to all employees as long as each employee can use the membership even if an employee chooses not to
• You provide your employee with a membership in a social or athletic club and it can be clearly demonstrated that you are the primary beneficiary of the membership. The membership is a taxable benefit to your employee if the membership in or use of the club's facilities provides only an indirect benefit to you. This would be the case where the employee becomes physically healthier as a result of using the club's facilities and becomes generally better able to perform their duties (for example, fewer sick days, less downtime, remain fit for duty)

For more information, go to  Recreational facilities and club dues .

Registered retirement savings plans (RRSPs)

Contributions you make to your employee's RRSP and RRSP administration fees that you pay for your employee are considered to be a taxable benefit for the employee. However, this does not include an amount you withheld from the employee's remuneration and contributed for the employee.

If the GST/HST applies to the administration fees, include it in the value of the benefit.

Contributions you make to your employee's RRSPs are generally paid in cash and are pensionable and insurable. Deduct CPP contributions and EI premiums.

However, your contributions are considered non-cash benefits and are not insurable if your employees cannot withdraw the amounts from a group RRSP (except for withdrawals under the Home Buyers' Plan or Lifelong Learning Plan) before the employees retire or cease to be employed.

Although the benefit is taxable and has to be reported on the T4 slip, you do not have to deduct income tax at source on the contributions you make to your employee's RRSPs if you have reasonable grounds to believe that the employee can deduct the contribution for the year. For details, go to Calculate payroll deductions and contributions .

Administration fees that you pay directly for an employee are considered taxable and pensionable. Deduct CPP contributions and income tax. These are considered a non-cash benefit, so they are not insurable. Do not deduct EI premiums.

Security options

A security is a share of the capital stock of a corporation or a unit of a mutual fund trust that is a qualifying person.

A qualifying person is a corporation or a mutual fund trust.

Many employers grant options to their employees as a form of compensation. These options give the employee of the employer or of a qualifying person with which the employer does not deal at arm’s length, the right to acquire a security of the employer, or a security of another qualifying person with which the employer does not deal at arm’s length.

Generally, options issued to employees will be provided under one of the following three types of plans:

• Employee stock purchase plan (ESPP) – This plan allows the employee to acquire shares at a discounted price, (i.e., for an amount that is less than the value of the stock at the time of the acquisition of the shares). Many ESPPs provide for a delay in the acquisition of the shares: an employee contributes a certain amount over a period of time and, at pre-specified periods, the employee can purchase shares at a discount using the accumulated contributions. The benefit is equal to the value of the shares, minus the amount paid.
• Stock bonus plan – Under this plan, an employer agrees to give the shares to the employee free of charge. In effect, the employer agrees to sell or issue shares to the employee for no cost.
• Stock option plan – This plan allows the employee to purchase shares of the employer’s company or of a non-arm’s length company at a pre-determined price.

When a corporation agrees to sell or issue its shares to an employee, or when a mutual fund trust grants options to an employee to acquire trust units, the employee may receive a taxable benefit. Generally, the employee receives the taxable benefit in the same year they acquire the shares or units, or otherwise disposes of their rights under the option agreement. However, when certain conditions are met, the taxable benefit is deferred until the year the employee disposes of the shares. For more information, refer to  Security options deduction for the disposition of shares of a Canadian controlled private corporation – Paragraph 110(1)(d.1) .

The taxable benefit is the difference between the fair market value (FMV) of the shares or units when the employee acquired them and the amount paid, or to be paid, for them, including any amount paid for the rights to acquire the shares or units. Also, a benefit can accrue to the employee if their rights under the agreement become vested in another person, or if they transfer or sell the rights.

The shares or trust units are considered to be acquired when legal ownership of the shares or units has been transferred and the vendor has entitlement to receive payment. In general, this would occur where the shares or units have been transferred to the employee/broker and paid for.

Include this benefit in box 14, "Employment income," and in the "Other information" area under code  38 at the bottom of the employee's T4 slip. Also, show the deductions the employee is entitled to in the "Other information" area of the T4 slip, as explained in the rest of this section.

For more information on security options, see archived Interpretation Bulletin IT-113R4, Benefits to Employees – Stock Options .

Cash-outs 

An employer may allow an employee to receive cash instead of securities in exchange for their options. Generally, the cash paid is equal to the difference between the FMV of the securities at the time the options would have been exercised and the amount paid or to be paid for the securities. This difference is equal to the employment benefit the employee is deemed to have received.

If an employee relinquishes a stock option right to an employer in exchange for a cash payment or other in kind benefit, the employee can claim the security options deduction if eligible or the employer can claim the cash-out as an expense, but not both. If the employer chooses not to claim the cash-out as an expense, the employer must make an election to do so under subsection 110(1.1) by entering this amount under code  86 , "Security options election," in the "Other information" area of the T4 slip. This would allow the employee to claim the deduction under paragraph 110(1)(d) . The amount you report under code 86 may be different from the taxable benefit you have to include in the employee's income in box 14 and under code 38 .

If code  86 of the T4 is not entered, this means that the employer decided to claim the expense and the employee would not be allowed to claim the deduction under paragraph  110(1)(d) . For more information, go to  Payroll .

You cannot elect to defer the security option.

Deduct CPP Contribution, EI premiums and income tax.

Security options are considered a non-cash benefit, so they are not insurable. In all cases do not deduct EI premiums. There is no CPP contribution or no income tax withholding requirement where a taxable benefit is received by an arms­-length employee with respect to the disposition of Canadian-controlled private corporation shares.  

In all other cases where a taxable benefit is received, the employer is required to withhold and remit an amount in respect of the taxable security option benefit (excluding any security option deduction) to the same extent as if the amount of the benefit had been paid as an employee bonus.

For more information, go to Security options . Deduct CPP contributions and income tax.

When determining the amount of the security option benefit subject to income tax withholding, the CRA will permit the employer to reduce the benefit by 50% using the security options deduction under paragraph 110(1)(d).

The employee can claim a deduction under paragraph 110(1)(d) of the Income Tax Act if all of the following conditions are met:

• A qualifying person agreed to sell or issue to the employee shares of its capital stock or the capital stock of another corporation that it does not deal with at arm's length, or agreed to sell or issue units of a mutual fund trust
• The employee dealt at arm's length with these qualifying persons right after the agreement was made
• If the security is a share, it is a prescribed share (as defined in the Income Tax Regulations) and if it is a unit, it is a unit of a mutual fund trust
• The price of the share or unit is not less than its fair market value (FMV) when the agreement was made
• There are additional conditions where an employee receives cash instead of acquiring securities (see Cash-outs ), and where the security options are granted on or after July 1, 2021 (see Annual vesting limit ). 

The deduction the employee can claim is one-half of the amount of the resulting taxable benefit in the year. Identify the amount of the deduction by entering it in the "Other information" area under code 39 at the bottom of the employee's T4 slip.

Annual vesting limit

For security options granted on or after July 1, 2021 (other than options granted after June 2021 that replace options granted before July 2021), the employee is subject to a $200,000 annual vesting limit under paragraph 110(1)(d) if the qualifying person meets both of the following conditions: 

• is not a Canadian-controlled private corporation (CCPC)
• has, or is part of a consolidated group that has, gross revenues of more than $500 million

How to determine the portion of the securities that are non-qualified securities

The portion of the securities that are non-qualified securities and not eligible for the deduction under 110(1)(d) is determined by the formula:

A = C + D – $200,000 (if the result is negative, the amount is zero)

C = total FMV (at the time the agreement is entered into) of the securities to be sold or issued under the agreement for a particular vesting year

D = is the lesser of:

(i) $200,000; and

(ii) the total FMV (at the time the agreements were entered into with the qualifying person, or another qualifying person that does not deal at arm's length with the particular qualifying person) of the securities to be sold or issued in respect of other agreements (whether entered into previously or contemporaneously) for that particular vesting year

B = the amount determined for C

The qualifying person is required to fill out T2 Schedule 59 to report non-qualifying security options beyond the $200,000 annual vesting limit.

Designation of non-qualified securities 

Qualifying persons subject to the new rules will be able to designate securities to be issued or sold under a securities option agreement as non-qualified securities for purposes of the employee stock option rules. When this designation is made, employees will not be entitled to a stock option deduction, but the employer will be entitled to a deduction for the value of the benefit received by employees.

Notification requirements for non-qualified securities

Qualifying persons will be required to notify employees in writing no later than 30 days after the day the securities option agreement is entered into for non-qualified securities, and to report the issuance of securities options for non-qualified securities on Form T2 Schedule 59 with their income tax and benefit return. 

Charitable donations

An employee will be ineligible for the additional 50% stock option deduction if the employee donates to a qualified donee a publicly listed security acquired under a securities option that is a non-qualified security under the new stock option rules. The employee may, however, be eligible for the charitable donation tax credit. 

The effect of foreign exchange gains and losses is not relevant when determining if an individual is eligible for the security option deduction.

Security options deduction for the disposition of shares of a Canadian-controlled private corporation (CCPC) – Paragraph 110(1)(d.1)

The employee receives the benefit in the year they dispose of the shares, but not in the year of acquiring them if all of the following conditions are met:

• When the agreement to sell or issue shares to the employee was concluded, the issuing or selling corporation was a CCPC
• The employee acquired shares after May 22, 1985
• The employee dealt at arm’s length with the corporation or any other corporation involved right after the agreement was concluded

In this case, the employee can claim a deduction under paragraph 110(1)(d.1) of the Income Tax Act if all of the following conditions are met:

• CCPC shares disposed of in the year where the employee dealt at arm’s length with the corporation
• The employee has not disposed of the share (otherwise than as a result of the employee's death) or exchanged the share within two years after the date the employee acquired it
• The employee did not deduct an amount under paragraph 110(1)(d) for the benefit

The deduction the employee can claim is one-half of the amount of the resulting taxable benefit in the year. Identify the amount of the deduction by entering it in the "Other information" area under code  41 at the bottom of the employee's T4 slip.

If you provide a free party or other social event to all your employees and the cost is $150 per person or less, the CRA does not consider it to be a taxable benefit. Additional costs such as transportation home, taxi fare, and overnight accommodation are not included in the $150 per person amount. If the cost of the party is greater than $150 per person, the entire amount, including the additional costs, is a taxable benefit.

If you provide a virtual social event to your employees, the benefit is not taxable if all of the following apply:

• It is available to all employees
• Only includes meals, beverages and delivery services, the total cost is $50 or less (including taxes) per employee
• Includes meals, beverages, delivery services and entertainment, the total cost is $100 or less (including taxes) per employee
• If you provide gift cards to your employees for meals, beverages and delivery services, the card must meet the conditions for the card to be considered non-cash
• If you reimburse expenses or provide an accountable advance, the employee must send you receipts
• The event is within the maximum annual limit for social events (total of six employer-paid combined in-person and virtual social events)
• persons includes spouses or common-law partners
• ancillary costs (such as transportation home, taxi fare, and overnight accommodation) for in-person social event attendees, are not included in total cost limit for the event
• If you provide gift cards to your employees attending virtually for meals, beverages and delivery services, the card must meet the conditions for the card to be considered non-cash

If the benefit is all cash, do not include the GST/HST and PST . However, if all or part of the taxable benefit is non-cash and is not an exempt or zero-rated supply, include the GST/HST and PST in the value of that part of the benefit.

If a spouse or common-law partner accompanies an employee on a business trip, the amount you reimburse the employee for the spouse's or common-law partner's travelling expenses is a taxable benefit for the employee.

The reimbursement is not considered a taxable benefit if the spouse or common-law partner went at your request and was mostly engaged in business activities during the trip.

For more information, see archived Interpretation Bulletin IT-131R2, Convention expenses .

You may offer your employees and their spouses the opportunity to participate in a group TFSA. Contributions you make to your employees' TFSA for them, as well as TFSA administration fees that you pay for them, are considered to be a taxable benefit for the employees. However, this does not include any amount you withheld from the employees' remuneration and contributed for the employees.

Contributions you make to your employees' TFSA for them are generally paid in cash and are taxable, pensionable, and insurable. Deduct income tax, CPP contributions and EI premiums.

Administration fees that you pay directly for an employee are taxable and pensionable. Deduct CPP and income tax. These are considered a non-cash benefit, so they are not insurable. Do not deduct EI premiums.

Whether a ticket is a taxable benefit to the employee depends on whether the ticket is provided for personal or business use. Each case is different.

Generally, the value of tickets is considered a taxable benefit when an employer gives an employee tickets for personal use unless it is being given under the terms of the gifts and awards policy. This would also be the case if the employer gives tickets to a person with whom the employee does not deal at arm’s length (such as a family member) for a non-business use.

There is no taxable benefit to an employee for the value of a ticket used for business purposes. Sometimes an employee needs a ticket to attend a game or event to be able to perform their employment duties. In these situations, the tickets are given to the employee for a business use.

Employment duties may include:

• promoting and marketing to suppliers or other business contacts
• supervising and managing at an event
• providing on-call, on-site emergency medical services
• conducting in-venue marketing promotions
• training on a product

An employer has to keep records to support the business use of tickets given to employees. These records should contain all of the following information:

• identification of the employee receiving the tickets
• details of the personal or business use
• number of tickets
• value of the tickets

Employers have to include in the employee’s income the value of all tickets, which are used for personal purposes, given to an employee during the year. Include the fair market value (usually the face value of the ticket, including applicable taxes) of the tickets in box 14, “Employment income,” and in the “Other information” area under code 40 at the bottom of the employee’s T4 slip.

If you reimburse or provide an allowance to your employees to offset the cost of tools that they need for their job or you pay for their tools, the amount of the payment is a taxable benefit and should be included in the employees' income.

When employed tradespersons (including apprentice mechanics) file their income tax and benefit return, they may be able to deduct part of the cost of eligible tools they bought to earn employment income as a tradesperson.

Employers have to fill out and sign Form T2200, Declaration of Conditions of Employment , to certify that the employee must acquire these tools as a condition of, and for use in their employment.

For more information, go to Tool reimbursements, allowances and rental payments .

Transportation passes

Airline passes for employees and retirees of an airline company.

If you provide standby airline passes to a current airline employee for their personal travel, there is no taxable benefit for the employee.

If you provide space-confirmed airline passes to a current airline employee for personal travel, the passes are a taxable benefit. The value of the benefit to be included in the employee’s income is the fair market value of the pass (including any fees and taxes), less any amount paid by the employee.

If you provide standby or space-confirmed airline passes to a retired airline employee for their personal travel, there is no taxable benefit for the retired employee.

If you pay for or provide your employee with public transit passes, it is usually a taxable benefit for the employee. Public transit includes transit by local bus, streetcar, subway, commuter train or bus, and local ferry.

Report the taxable benefit on the employee's T4 slip in box 14, "Employment income," and in the "Other information" area under code  40 at the bottom of the slip.

Transit passes – employees of a transit company

If your company is in the business of operating a bus, streetcar, subway, commuter train or bus, or ferry service, and you provide free transit passes to your employees or their families, special rules apply.

If you provide free or discounted passes to a current or a retired employee of one of the businesses mentioned above, and the passes are only for the employee's or the retiree's use, there is no taxable benefit for the employee or the retiree.

To qualify as a non-taxable benefit under this special rule, ferry passes are limited to passenger (walk on) fares only.

If you provide free or discounted passes to a member of your employee's or retired employee's family, the fair market value (FMV) of the pass is a taxable benefit for the employee. Report the retiree's benefit using code  028 , "Other income" in the "Other information" area at the bottom of the T4A slip .

If you provide free or discounted passes to a current employee in an area other than the transportation business or its operations, their FMV is a taxable benefit for the employee. For example, if a city owns a transit company, the FMV of a pass given to a current employee in the city's accounting department would be a taxable benefit, while a pass given to a current employee in the accounting department of the transit business operations would not be a taxable benefit.

For examples of situations where transit passes are considered taxable benefits, go to  Transportation and airline passes

You may give a part-time employee a reasonable allowance or reimbursement for travelling expenses incurred by the employee going to and from a part-time job. If so, and you and the part-time employee are dealing at arm's length, you do not have to include that amount in the employee's income. This applies to:

• teachers and professors who work part-time in a designated educational institution in Canada, providing service to you as a professor or teacher, and the location is not less than 80 kilometres from the employee's home
• part-time employees who had other employment or carried on a business, and they did the duties at a location no less than 80 kilometres from both the place of the employee's home and the place of the other employment or business

You may pay a reasonable travel allowance for expenses other than for the use of an automobile (such as meals, lodging, per diem allowance) to a salesperson or member of the clergy. You do not have to include the allowance in the employee's income if it was for expenses related to the performance of duties of the office or employment and the employee is either of the following:

• an agent selling property or negotiating contracts for the employer
• a member of the clergy

You have to include reasonable travel allowances in the income of employees, other than a salesperson or member of the clergy, who travel to perform the duties of the office or employment, unless the allowances are received by the employee for travelling away from the municipality and the metropolitan area where the employer's establishment is located and where the employee ordinarily works or reports.

In some situations, you may provide an allowance to your employee for travel (other than an allowance for the use of a motor vehicle) within a municipality or metropolitan area so your employee can perform their duties in a more efficient way during a work shift.

This allowance is not a taxable benefit and can be excluded from the employee's income if all of the following conditions are met:

• The employee travels away from the office
• The allowance is reasonable. The CRA generally considers a value of up to $23 for the meal portion of the travel allowance to be reasonable
• You are the primary beneficiary of the allowance
• The allowance is not an additional form of remuneration

This means that you do not have to include this type of travel allowance if its main reason is so that your employee's duties are performed in a more efficient way during a work shift.

For examples of situations where a travel allowance is considered a taxable benefit, go to Examples – Travel allowance .

Whether an allowance for travel expenses is reasonable is a question of fact. You should compare the reasonable costs for travel expenses that you would expect your employee to incur against the allowance you pay to the employee for the trip.

If the travel allowance is reasonable, you do not have to include it in your employee's income. If it is not reasonable, the allowance has to be included in your employee's income.

For more information, see paragraph 48 in archived Interpretation Bulletin IT-522R, Vehicle, Travel and Sales Expenses of Employees .

Your employee may be able to claim certain employment expenses on their income tax and benefit return. For more information, see Employee's allowable employment expenses .

Uniforms and protective clothing

Your employee does not receive a taxable benefit if either of the following conditions apply:

• You supply your employee with a distinctive uniform they have to wear while carrying out the employment duties
• You provide your employees with protective clothing (including safety footwear and safety glasses) designed to protect them from hazards associated with the employment

If you reimburse or pay an accountable advance to your employee to buy uniforms or protective clothing and require receipts to support the purchases, the reimbursement or accountable advance is not a taxable benefit if the following conditions are met:

• the cost of the uniforms or protective clothing is reasonable
• by law, the employee has to wear the protective clothing on the work site

If you pay an allowance to your employee for the cost of protective clothing and did not require receipts to support the purchases, the allowance is not a taxable benefit if all of the following conditions apply:

• By law, the employee has to wear the protective clothing on the work site
• The employee used the allowance to buy protective clothing
• The amount of the allowance is reasonable

You may pay a laundry or dry cleaner to clean uniforms and protective clothing for your employee or you may pay a reasonable allowance to your employee (when they do not have to provide a receipt). You may also reimburse the employee for these expenses when they present a receipt. If you do either of these, the amounts you pay are not taxable benefits for the employee.

Chapter 4 – Housing and travel assistance benefits paid in a prescribed zone

This chapter applies to you if you meet both of the following conditions:

• You are an employer or a third-party payer who provides employment benefits for board, lodging, transportation, or travel assistance
• You provide these benefits to an employee who works or lives in locations that are in prescribed zones for purposes of the northern resident's deductions

If your employee works at a special site or a remote work location that is not in a prescribed zone, this chapter does not apply to you. For more information, see Board, lodging, and transportation – Special work sites and remote work locations .

For a list of places in prescribed northern zones and prescribed intermediate zones, go to Northern residents .

Accommodation or utilities provided by the employer

If you provide accommodation or utilities free of charge, it is a taxable benefit to your employee. The method you use to determine the value of the benefit depends on whether or not the place in a prescribed zone has a developed rental market.

Some cities and towns in prescribed zones have developed rental markets. When that is the case, you base the value of the benefit for any rent or utility you provide on its fair market value.

The cities and towns in prescribed zones that have developed rental markets are:

In places in prescribed zones without developed rental markets, you have to use other methods to set a value on the housing benefit. The method you use depends on whether you own the residence or rent it from a third party.

If you provide both rent and utilities and can calculate their cost as separate items, you have to determine their value separately. Add both items to get the value of the housing benefit.

If your employee reimburses you for all or part of their rent or utilities, determine the benefit as explained below. Subtract any amount reimbursed by your employee and include the amount that remains in their income.

Accommodations you own

If you own a residence that you provide rent free to your employee, report as a benefit whichever of the following amounts is less:

• the fair market value of the rent
• the ceiling amount

Similarly, the amount you have to report as a benefit for utilities is whichever of the following amounts is less:

• the fair market value of the utilities

Accommodations you rent from a third party

If you rent a residence from a third party and provide it rent free to your employee, report as a benefit whichever of the following amounts is less:

• the amount you pay the third party

Similarly, the amount you have to report as a benefit for utilities is whichever of the following amounts is less:

There are allowable ceiling amounts for different types of accommodation. Use these ceiling amounts to help determine the value of the housing benefit you provide in places in prescribed zones that do not have developed rental markets.

The amounts are considered to include any GST/HST that applies, so you do not have to calculate this amount. If the amount of the housing benefit you report is based on the fair market value, you have to calculate and report any GST/HST that applies. If the total of the fair market value, plus the GST/HST, is more than the allowable ceiling amount, report the allowable ceiling amount as the housing benefit.

For a list of the ceiling amounts for rent and utilities and definitions for different types of accommodation, go to Allowable ceiling amounts .

If more than one employee occupies the same accommodation, divide the total housing benefit by the number of occupants.

Board, lodging, and transportation at a special work site in a prescribed zone

If an employee received a benefit or an allowance for working at a special work site that is excluded from income, this amount may affect their claim for a northern residency deduction.

If the employee worked at a special work site in a place in a prescribed zone and kept their principal place of residence in a place outside of a prescribed zone, you will have to identify the exempt part of the board and lodging benefit or allowance on the employee's T4 or T4A slip.

In the "Other information" area of the T4 slip, enter under code  31 , the exempt part that is related to work sites within 30 kilometres from the nearest urban area with a population of at least 40,000 persons. Do not include this in box 14, "Employment income."

If you are a third-party payer and are completing a T4A slip for the employee of another employer, report the exempt part using code  124 "Board and lodging at special work sites," in the "Other information" area at the bottom of the T4A slip.

You have to do this even though you did not include the excluded amount in income. This way, the employees will have all the information required to correctly calculate their residency deduction.

You paid your employee $4,000 for board and lodging at a special work site that is in a prescribed zone. You and the employee filled out  Form TD4, Declaration of Exemption – Employment at a Special Work Site .

Since the benefit is not included as income, you did not enter the amount of the benefit in box 14, "Employment income," or in the "Other information" area under code  30 at the bottom of the T4 slip.

Of the $4,000 you paid, $1,200 relates to a special work site that was located 27 kilometres from a town with a population of 43,000 people (the 30-kilometre part).

You have to enter $1,200 in the "Other information" area under code  31 at the bottom of the T4 slip, even though it was not entered in the "Other information" area under code  30 . The employee will then enter $1,200 on their Form T2222, Northern Residents Deductions .

An amount that is not included as income for allowances at a remote work location does not affect the employee's claim for a northern residency deduction.

Travel assistance benefits

If you provide an employee with travel assistance in a prescribed zone, the benefit is taxable unless it was for business travel. The travel assistance could be for such things as vacation, bereavement, medical, or compassionate reasons.

If employees travel using transportation that you own or charter, determine the value of the benefit by assigning a fair market value to the transportation.

When employees travel by some means other than air, the cost of travel may include automobile expenses, meals, hotel and motel accommodations, camping fees, taxi fares, and road and ferry tolls.

When you give employees travel assistance benefits other than cash or refundable tickets (such as travel warrants, vouchers, or non-refundable tickets), the employees do not receive any benefit until they or members of their household take the trip. The benefit is income for the employees in the year the trip starts, and you should report it in that year.

There are many ways of providing travel assistance benefits. You can pay your employee a travel allowance before the trip, such as a certain amount per hour, or on some other periodic basis. You can also make lump-sum payments to your employee before or after the trip is taken. You should report such payments in your employee's income in the year they receive them, no matter when your employee or members of their household travel. For more information, go to  Housing and travel assistance benefits paid in a prescribed zone .

You have to report these benefits in box 14, "Employment income," and in the "Other information" area under code  32 at the bottom of the employee's T4 slip.

If you are a third party who supplies travel benefits to the employee of another employer, report these benefits under code 028 "Other income," in the "Other information" area at the bottom of the T4A slip.

An employee who qualifies for the northern residents travel deduction will use this amount to calculate their claim. An employee can claim two trips per year, unless the trips were for medical reasons. Therefore, you have to show the value of medical travel benefits separately on the slip, as explained below.

If the travel assistance is a taxable benefit, include any GST/HST that applies in the value of the benefit. Do not include the GST/HST in the value of the travel allowances.

Medical travel includes any trip your employee or members of their household take to get medical services that are not available in the area where they live. Medical travel benefits are considered to be the cost of transportation from the place in a prescribed zone to the place where medical treatment is available. This includes the transportation cost of an attendant if the patient needs one while travelling.

You have to identify the portion of the travel assistance that refers to the medical travel benefits you provide to your employee.

For a T4 slip, enter the entire travel assistance benefit under code 32 in the "Other information" area. Enter the medical part under code 33 .

For a T4A slip, enter the entire travel assistance benefit under code  028 "Other income," in the "Other information" area at the bottom of the slip. Enter the medical part under code  116 "Medical travel assistance."

If you do not identify which part of the benefit was for medical travel, the CRA will consider all travel assistance as vacation (or other) travel and the employee will not be entitled to claim a deduction for medical travel. As well, the CRA will limit the deduction for the employee and the members of the household to two trips each.

Amounts you pay or reimburse your employee for medical travel or any associated cost under the terms of a private health services plan are not taxable benefits. Payments you make due to an obligation you have under a collective agreement may be considered a private health services plan. If this is the case, you should not report them on the employee's T4 slip.

For more information, go to:

• Benefits provided to an employee who has severe or prolonged impairement (disability)

When travel assistance benefits are in the form of non-refundable tickets or travel vouchers, you have to make payroll deductions when the benefit becomes taxable, i.e. when the employee or member of their household takes the trip. However, when you give travel assistance in the form of cash, the CRA considers it to be a cash advance, and you have to make the payroll deductions when the advance is paid to the employee.

You may waive the requirement to deduct income tax from the full travel assistance payment you give to your employee who lives in a prescribed northern zone (or from 50% of the payment received by an employee who lives in a prescribed intermediate zone). To do this, the employee has to agree, in writing, to use the payment entirely for vacation or medical travel when they receive it. If the employee does not agree, you have to deduct income tax.

Whether or not you have to make income tax deductions, you have to deduct CPP contributions and EI premiums on cash payments. You have to deduct CPP contributions on non-cash benefits if the employee also receives cash remuneration from you during the year. If the non-cash benefit is the only form of remuneration you provide to your employee in the year you do not have to make payroll deductions. For more information about the non-cash benefits withholding policy, go to Chapter 1 – General information .

Form TD1, Personal Tax Credits Return

Employees who live in a prescribed zone during a continuous period of at least six months (that begins or ends in the tax year) may be entitled to claim the northern residents deductions when filing their income tax and benefit returns. As a result, these employees can ask for a reduction in payroll deductions by completing the back of Form TD1, Personal Tax Credits Return .

The residency deduction is equal to whichever is less :

• 20% of their net income for the year
• the residency amount they can claim

Employees cannot claim a residency amount for both the principal place of residence and the special work site for the same period, even if they are both located in prescribed zones.

For 2023 , an employee living in a prescribed northern zone can claim the total of:

• a basic residency amount of $11.00 per day for each day they live in the prescribed northern zone
• an additional residency amount of $11.00 per day for each day they live in and keeps a residence in that area, if during that time no one else is claiming a basic residency amount for living in the same residence for the same period

For 2023, employees living in a prescribed intermediate zone can claim 50% of the total of the above amounts.

Employees who receive board and lodging benefits from employment at a special work site in a prescribed zone have to reduce their residency amount by the value of the 30-kilometre part of the benefit they receive if they keep a principal residence that is not in a prescribed zone. The 30-kilometre part of the excluded benefit will be shown in the "Other information" area under code 31 at the bottom of the employee's T4 slip. For more information, see Board, lodging, and transportation at a special work site in a prescribed zone .

To calculate the amount of tax you should deduct if an employee is claiming a residency deduction on Form TD1:

• reduce the residency amount by 50% if the employee lives in a prescribed intermediate zone (if the conditions noted above apply, reduce the residency amount by the 30-kilometre part of the excluded board and lodging benefits from employment at a special work site)
• divide the employee's net deduction for the year (amount on the back of Form TD1, minus the above adjustments) by the number of pay periods in the year
• subtract the result from their gross earnings for each pay period
• see the tax tables that apply

Chapter 5 – Remitting the  GST/HST on employee benefits

This chapter discusses the GST/HST treatment of employee benefits.

The Canada Revenue Agency is responsible for administering the GST/HST . In Quebec, Revenu Québec administers the GST/HST unless you are a person that is a selected listed financial institution (SLFI) for GST/HST or QST purposes or both. If the physical location of your business is in Quebec, contact Revenu Québec, at   1-800-567-4692 . Also see the Revenu Québec publication IN-203, General Information Concerning the QST and the GST/HST , available at Revenu Québec .

Employee benefits

Salaries, wages, commissions, and other cash remuneration (including gratuities) you make to employees are not subject to the GST/HST.

However, the cost of benefits or non-cash compensation provided to an employee, commonly referred to as fringe or employee taxable benefits may be subject to the  GST/HST . For the most part, the GST/HST treatment of these benefits is based on their treatment under the Income Tax Act .

Generally, if a benefit is taxable for income tax purposes, the CRA consider you to have made a supply of a property or service to the employee.

If the property or service that gives rise to the taxable benefit is subject to GST/HST , you are considered to have collected the  GST/HST on that benefit. However, there are situations where you will not be considered to have collected the GST/HST on taxable benefits given to employees. These situations can be found in the section titled Situations where you are not considered to have collected the GST/HST .

The employee does not pay the GST/HST that you have to remit on taxable benefits. However, as explained in previous chapters, an amount for the GST/HST has already been included in the taxable benefits you will report on your employee’s T4 slip.

The following steps will help you determine whether you have to remit the GST/HST on employee taxable benefits.

Step 1 – Determine whether the benefit is taxable under the Income Tax Act and the Excise Tax Act (see the previous chapters).

Step 2 – For each taxable benefit, determine whether any of the situations where you are not considered to have collected the GST/HST applies.

If none of the situations apply, you are considered to have collected the GST/HST on the taxable benefit and must calculate the amount of the GST/HST due. Go to Step 3.

Step 3 – If you are considered to have collected the GST/HST on a taxable benefit, you have to calculate the amount of the GST/HST due. More information on how to calculate the amount of GST/HST due can be found in the sections Automobile operating expense benefits  and Benefits other than automobile operating expense benefits .

Step 4 – Include the amount of the GST/HST due on your GST/HST return and send your remittance, if applicable, with your GST/HST return for the reporting period that includes the last day of February 2024 .

If the GST/HST is for a reimbursement made by an employee or an employee’s relative for a taxable benefit other than a standby charge or the operating expense of an automobile, the amount may be due in a different reporting period. For more information, see Benefits other than automobile operating expense benefits .

Situations where you are not considered to have collected the  GST/HST

You are not considered to have collected the  GST/HST on taxable benefits provided to employees in any of the following situations:

• The property or services that give rise to a taxable benefit are GST/HST -exempt or zero-rated
• A taxable benefit results from an allowance included in the income of the employee under paragraph 6(1)(b) of the Income Tax Act
• You are restricted from claiming an input tax credit (ITC) in the situations described in section ITC restrictions  for the GST/HST paid or payable on the property and services that give rise to the taxable benefit
• the property or services that give rise to a taxable benefit are supplied outside Canada

You, as an employer who is a GST/HST registrant, would like to reward an employee for outstanding performance, and you have agreed to pay for hotel accommodations and three meals a day, for one week, in London, England. An amount will be included in the income of the employee as a taxable benefit. However, you will not be considered to have collected tax in respect of the benefit provided to the employee, since the supplies were made outside of Canada.

Also, if the taxable benefit is for the standby charge or operating expense benefit of an automobile or an aircraft, you are not considered to have collected the GST/HST on this benefit in the following situations:

• you are an individual or a partnership and the passenger vehicle or the aircraft that you have bought is used less than 90% in the commercial activities of the business
• you are not an individual, a partnership, or a financial institution, and the passenger vehicle or aircraft that you bought is used 50% or less in the commercial activities of the business
• you are a financial institution and choose to treat the passenger vehicle or aircraft you lease or have bought as being used only in non-commercial activities of the business (see Note below)
• you are not a financial institution and you lease the passenger vehicle or aircraft which you use 50% or more in non-commercial activities of the business, and you choose to treat it as being used 90% or more in such non-commercial activities (see Note below)

To make this choice, fill out Form GST30, Election for Passenger Vehicles or Aircraft to be Deemed to be Used Exclusively in Non-Commercial Activities , or state in writing the information required on the form. You do not have to file this form or statement, but you have to keep it with your records for audit purposes. For more information about this election, contact the CRA at 1-800-959-5525 .

How to calculate the amount of the  GST/HST you are considered to have collected

The amount of the  GST/HST you are considered to have collected on a taxable benefit is based on a percentage of the value of the benefit for GST/HST purposes. The percentage rate you use depends on:

• the province or territory in which the employee ordinarily reported to work
• if you were, at any time, a large business, for the purpose of the recapture of input tax credits (RITC) for the provincial part of the HST
• if the benefit is an automobile operating expense benefit or some other type of benefit

The value of the benefit for GST/HST purposes is the total of the following two amounts:

• the amount reported on the T4 or T4A slip for the benefit
• if the taxable benefit is for a standby charge or the operating expense of an automobile , the amount, if any, that the employee or the employee's relative reimbursed you for that benefit

When an employee or an employee's relative has reimbursed an amount equal to the entire taxable benefit for a standby charge or the operating expense of an automobile and, as a result, no benefit is reported on the T4 slip, the value of the benefit for  GST/HST purposes is equal to the amount of the reimbursement.

If the last establishment where your employee ordinarily worked or to which they ordinarily reported in the year is located in a participating province (Prince Edward Island, New Brunswick, Newfoundland and Labrador, Nova Scotia, or Ontario), you are considered to have collected an amount equal to a percentage of the value of the benefit for GST/HST purposes, based on one of the following rates:

• 11% for Nova Scotia, New Brunswick, Newfoundland and Labrador, and Prince Edward Island
• 9% for Ontario

If the last establishment where your employee ordinarily worked or to which they ordinarily reported in the year is located in a non-participating province or territory (the rest of Canada), you are considered to have collected 3% of the value of the benefit for GST/HST purposes.

When and how to report the GST/HST you are considered to have collected

You are considered to have collected the GST/HST, on a taxable benefit subject to the GST/HST, at the end of February in the year after the year you provided the benefit to the employee. This corresponds with the deadline for issuing T4 slips.

Include the amount of the GST/HST due in your GST/HST return for the reporting period that includes the last day of February 2024.

You are a GST/HST registrant and have a monthly reporting period. Although you calculated the taxable benefits, including any GST/HST and PST , for each applicable pay period provided to your employees during 2023 , you are considered to have collected the GST/HST on the taxable benefits at the end of February 2024 . In your  GST/HST return for the reporting period that includes the last day of February 2024, you have to include the GST/HST for the taxable benefits given to your employees in the prior calendar year on line 103 ( line 105 if filed electronically) of your GST/HST return.

The benefit for an automobile you provide is generally made up of a standby charge benefit plus an operating expense benefit minus any reimbursements employees make in the year for these benefits, as discussed in Chapter 2 . When you are calculating the amount of GST/HST that you are considered to have collected on an automobile benefit you must take all three factors into consideration. The standby charge will be calculated at a certain percentage, and the operating expense benefit will be calculated at another. For more information, go to  Calculating a standby charge for automobiles you own or lease .

In addition, the percentages used to calculate the amount of GST/HST will depend on the province or territory in which the automobile is provided as discussed above. Additional information on the GST/HST implications on automobile benefits can be found in GST Memorandum 9.2, Automobile benefits .

Example 1 – Remitting the GST/HST on automobile benefits in a non-participating province

As a corporation registered for the GST/HST , you buy a vehicle that is used more than 50% in commercial activities and is made available to your employee during 2023. The last establishment where the employee ordinarily reported in the year for the corporation was located in Manitoba .

You calculated a taxable benefit (including GST and PST ) of $4,800 on the standby charge and an operating expense benefit of $600. Your employee reimbursed you $1,800 for the automobile operating expenses within 45 days of the end of 2023 , so the operating expense benefit to be reported was reduced by this amount.

You claimed an input tax credit (ITC) for the purchase of the automobile and also on the operating expenses. Since the benefit is taxable under the Income Tax Act, and no situations described in Situations where you are not considered to have collected the GST/HST  apply, you calculate the GST remittance as follows:

Standby charge benefit

GST considered to have been collected on the standby charge benefit

$4,800 × 4/104 = $184.62

Operating expense benefit

Taxable benefit reported on T4

Employee’s partial reimbursement of operating expenses

Total value of the benefit

GST considered to have been collected on the operating expense benefit

Total GST to be remitted on the automobile benefit

You are considered to have collected GST in the amount of $256.62 at the end of February 2024 . You have to include this amount on your GST/HST return for the reporting period that includes the last day of February 2024 .

Example 2 – Remitting the GST/HST on automobile benefits in a participating province 

Using the same facts as in Example 1, assume that the last establishment to which the employee ordinarily reported in the year for the corporation was located in New Brunswick . The corporation is not a large business for the purpose of recapturing input tax credits for the provincial part of the HST. In this case, you would calculate the HST remittance as follows:

HST considered to have been collected on the standby charge benefit

$4,800 × 14/114 = $589.47

HST considered to have been collected on the operating expense benefit

$2,400 × 11% = $264.00

Total HST to be remitted on the automobile benefit

You are considered to have collected HST in the amount of $853.47 at the end of February 2024 . You have to include this amount on your GST/HST return for the reporting period that includes the last day of February 2024 .

Input tax credits (ITCs)

As a registrant, you can claim an ITC to recover the  GST/HST paid or payable on the purchases and operating expenses related to your commercial activities.

Generally, commercial activities include the making of supplies of taxable property and services. For more information about what are considered to be commercial activities, go to GST/HST for businesses .

For employee benefits, you can usually claim an ITC for the GST/HST paid or payable on property and services you supply to your employees or their relatives as a benefit if it is related to your commercial activities.

However, in some situations, you will not be able to claim an ITC for the GST/HST paid or payable for property or services that give rise to taxable benefits you provide your employees. For information on these situations, read the rest of this section.

Remember, if you cannot claim an ITC for the  GST/HST paid or payable for property or services that give rise to a taxable benefit due to the restrictions described in one of the following paragraphs, you are not considered to have collected the GST/HST and, as a result, you do not have to remit the GST/HST on that benefit.

Club memberships

You may pay or reimburse fees for membership to any club whose main purpose is to provide dining, recreational, or sporting facilities. In such cases, you cannot claim an ITC for the GST/HST paid or payable, regardless of whether the club membership fees or dues are a taxable benefit for the employee for income tax purposes.

However, you can claim ITCs for the GST/HST paid or payable on such memberships if you acquire the memberships exclusively for supply in the ordinary course of a business of supplying them.

Exclusive personal use

You cannot claim an ITC for the GST/HST paid or payable on property or services you acquire, import, or bring into a participating province for the exclusive personal consumption, use, or enjoyment (90% or more) of an employee or an employee's relative.

However, you can claim an ITC in the following situations:

• The consumption, use, or enjoyment of the property or service by the employee or their relative does not give rise to a taxable benefit for income tax purposes and no amounts were payable by the employee for this benefit. The most common type of non-taxable benefit is the paying of moving expenses by an employer. Moving expenses that are considered non-taxable benefits are discussed in Moving expenses and relocation benefits
• During the same GST/HST reporting period, you make a supply of the property or service to an employee or their relative for consideration that becomes due in that period and that is equal to its fair market value

Property supplied by way of lease, licence, or similar arrangement

You cannot claim an ITC for the GST/HST paid or payable on property supplied by way of lease, licence, or similar arrangement that is more than 50% for the personal consumption, use, or enjoyment of one of the following:

• if you are an individual , yourself or another individual related to you
• if you are a partnership , an individual who is a partner or another individual who is an employee, officer, or shareholder of, or related to, a partner
• if you are a corporation , an individual who is a shareholder or another individual related to the shareholder
• if you are a trust , an individual who is a beneficiary or another individual related to the beneficiary

However, you can claim an ITC if, during the same GST/HST reporting period, you make a taxable supply of the property to that individual for consideration that becomes due in that period and that is equal to its fair market value.

For more information on ITCs related to employee benefits, see GST/HST Memorandum 9.1, Taxable Benefits (Other than Automobile Benefits) .

If you acquired property before 1991, you did not pay the  GST/HST . Also, you do not generally pay the GST/HST when you acquire property from a non-registrant. As a result, you cannot claim an ITC under these circumstances. However, if you make this property available to your employee and the benefit is taxable for income tax purposes, you may still be considered to have collected the  GST/HST on this benefit.

You bought a passenger vehicle from a non-registrant and made it available to your employee throughout 2023. The passenger vehicle is used more than 90% in the commercial activities of your business. You report the value of the benefit, including the GST/HST and if applicable, the PST, on the employee's T4 slip. For GST/HST purposes, you will be considered to have collected the GST/HST on this benefit even if you could not claim an ITC on the purchase of the passenger vehicle.

Examples for remitting GST/HST on employee benefits

The following examples will help you apply the rules for remitting the  GST/HST on employee benefits.

Automobile benefit – See examples in the section on “ Automobile benefits – standby charges, operating expense benefit, and reimbursements ”.

Motor vehicle benefit – A Prince Edward Island employer provided a motor vehicle to an employee who drove it for personal and business use. The employer has never been a large business . The taxable benefit for the personal use is $5,100 . As Prince Edward Island is a participating province, the HST considered to have been collected is calculated as follows:

HST considered to have been collected on the motor vehicle benefit = $5,100 × 14/114 = $626.32

You are considered to have collected the HST in the amount of $626.32 at the end of February 2024 . You have to include this amount on your GST/HST return for the reporting period that includes the last day of February 2024 .

The calculation of the amount of GST/HST you are considered to have collected on the motor vehicle benefit differs from that of an amount calculated on an automobile benefit.

Subsidized Meals – An Ontario employer provides subsidized meals to employees (such as in an employee dining room or cafeteria), and the employee does not pay any amount for these meals. The cost of food, preparation and service per employees over the course of the year is $2,052 including HST. The ITCs will not be restricted on property or services purchased to make supplies of meals if the employer is acquiring the property or service generally for the use of employees, but not specifically for any particular employee.

As Ontario is a participating province, the HST considered to have been collected is calculated as follows:

HST considered to have been collected on the subsidized meals benefit = $2,052 × 12/112 = $219.86

You are considered to have collected the HST in the amount of $219.86 at the end of February 2024 . You have to include this amount on your GST/HST return for the reporting period that includes the last day of February 2024 .

Cell phone – An employer located in Manitoba provides the general manager of the company with a cell phone both for business and personal use.

The value of the taxable benefit for personal use of the cell phone for the year is $617. The employee reimbursed the employer $200 for the cell phone in December. The amount of the benefit shown on the T4 is $417.

As Manitoba is a non-participating province, the GST considered to have been collected is calculated as follows:

GST considered to have been collected on the cell phone benefit = $417 × 4/104 = $16.04

GST collected for the reimbursement – $200 × 5/105 = $9.52

In this situation you have to include the GST for the reimbursement in your GST return for the reporting period that includes the date of the reimbursement (December) = $200 × 5/105 = $9.52 . You are considered to have collected the GST on the cell phone benefit in the amount of $16.04 at the end of February 2024 . You have to include this amount on your GST/HST return for the reporting period that includes the last day of February 2024 .

Long-service award – You bought a watch for $560 (including the GST/HST and PST) for your employee to mark the employee’s 25 years of service. It was the only gift or award provided to the employee in the year. You reported a taxable benefit of $60 in box 14 and under code  40 on the employee’s T4 slip.

There is no GST considered to have been collected on the long service award .

In this situation, you cannot claim an ITC because you bought the watch for the employee’s exclusive personal use and enjoyment. Therefore, there is no GST/HST to remit on the benefit.

Special clothing – You provided safety footwear designed to protect your employee from hazards associated with their employment. The footwear is not considered to be a taxable benefit for the employee, so you are not considered to have collected the GST/HST on the footwear and you do not have to remit any tax. However, you can claim an ITC for any GST/HST that you paid for the footwear.

There is no GST considered to have been collected on the special clothing .

This chart indicates whether you need to deduct Canada Pension Plan (CPP) and employment insurance (EI) from the taxable allowances and benefits discussed in this guide, and shows which codes you should use to report them on the employee's T4 slip. The chart also indicates whether the GST/HST has to be included in the value of the taxable benefit for income tax purposes. Cash reimbursements and non-cash benefits are subject to GST/HST, unless they are for exempt or zero-rated supplies. Cash allowances are not subject to GST/HST.

 Notes

Digital services, handle your business taxes online.

My Business Account lets you view and manage your business taxes online.

Use the my Business Account throughout the year to:

• make a payment online to the CRA with My Payment, create a pre-authorized debit (PAD) agreement, or create a QR code to pay in person at Canada Post
• request a payment search
• file or amend information returns without a web access code
• submit documents to the CRA
• manage authorized representative and authorization requests
• register to receive email notifications and to view mail from the CRA in My Business Account
• manage addresses, direct deposit information, program account names, operating names, phone numbers, and business numbers in your profile
• view and pay account balance
• calculate and pay instalment payments
• provide a nil remittance
• transfer a misallocated payment
• track the progress of certain files you have submitted to the CRA
• submit an audit enquiry
• download reports
• request relief of penalties and interest
• manage multi-factor authentication settings

To sign in to or register for the CRA's digital services, go to:

• My Business Account , if you are a business owner
• Represent a Client , if you are an authorized representative or employee

For more information, go to Digital services for businesses .

Register for email notifications to find out when your CRA mail, like your PD7A – Statement of account for current source deductions , and remittance voucher is available online in My Business Account.

For more information, go to Email notifications from the CRA – Businesses . 

A pre-authorized debit (PAD) is a secure online, self-service, payment option for individuals and businesses to pay their taxes. A PAD lets you authorize withdrawals from your Canadian chequing account to pay the CRA. You can set the payment dates and amounts of your PAD agreement using the CRA’s secure  My Business Account service at My Business Account , or the CRA BizApp at Mobile apps – Canada Revenue Agency . PADs are flexible and managed by you. You can use My Business Account to view your account history and modify, cancel, or skip a payment. For more information, go to Pay by pre-authorized debit .

For more information

If you need more information after reading this guide, go to  Taxes  or call 1-800-959-5525 .

Direct deposit is a fast, convenient, and secure way to get your CRA payments directly into your account at a financial institution in Canada. For more information and ways to enrol, go to Direct deposit – Canada Revenue Agency or contact your financial institution.

The CRA encourages filing your return electronically. If you need a paper version of the CRA's forms and publications, go to Forms and publications or call 1-800-959-5525 .

The CRA can send you an email when new information on a subject of interest to you is available on the website. To subscribe to the electronic mailing lists, go to  Canada Revenue Agency electronic mailing lists . 

• GST/HST Memorandum 9.1, Taxable Benefits (Other than Automobile Benefits)
• GST/HST Memorandum 9.2, Automobile Benefits

For tax information by telephone, use the CRA's automated service, TIPS, by calling 1-800-267-6999 .

If you use a TTY for hearing or speech impairment, call 1-800-665-0354 .

If you use an operator-assisted relay service , call the CRA's regular telephone numbers instead of the TTY number.

Formal disputes (objections and appeals)

If you disagree with an assessment, determination, or decision, you have the right to file a formal dispute.

For more information about objections or formal disputes, and related deadlines, go to Objections, appeals, disputes, and relief measures .

CRA service feedback and program

You can expect to be treated fairly under clear and established rules, and get a high level of service each time you deal with the CRA. For more information about the Taxpayer Bill of Rights, go to  Taxpayer Bill of Rights .

You may provide compliments or suggestions and if you are not satisfied with the service you received:

1. Try to resolve the matter with the employee you have been dealing with or call the telephone number provided in the correspondence received from the CRA. If you do not have contact information for the CRA, go to Contact the Canada Revenue Agency .

2. If you have not been able to resolve your service-related issue, you can ask to discuss the matter with the employee’s supervisor.

3. If the problem is still not resolved, you can file a service-related complaint by filling out Form RC193, Service Feedback . For more information and to learn how to file a complaint, go to  Submit service feedback .

If you are not satisfied with how the CRA has handled your service-related complaint, you can submit a complaint to the Office of the Taxpayers’ Ombudsperson .

If you have received a response regarding a previously submitted a service complaint or requested a formal review of a CRA decision and feel you were not treated impartially by a CRA employee, you can submit a reprisal complaint by filling out Form RC459, Reprisal Complaint .

For more information about complaints and disputes, go to Service feedback, objections, appeals, disputes, and relief measures .

When a due date falls on a Saturday, Sunday, or public holiday recognized by the CRA , your payment is considered on time if the CRA receives it on or if it is processed at a Canadian financial institution on or before the next business day.

For more information, go to Payroll .

The CRA administers legislation, commonly called taxpayer relief provisions, that allows the CRA discretion to cancel or waive penalties or interest when taxpayers cannot meet their tax obligations due to circumstances beyond their control.

The CRA’s discretion to grant relief is limited to any period that ended within 10 calendar years before the year in which a request is made.

For penalties, the CRA will consider your request only if it relates to a tax year or fiscal period ending in any of the 10 calendar years before the year in which you make your request. For example, your request made in 2023 must relate to a penalty for a tax year or fiscal period ending in 2013 or later.

For interest on a balance owing for any tax year or fiscal period, the CRA will consider only the amounts that accrued during the 10 calendar years before the year in which you make your request. For example, your request made in 2023 must relate to interest that accrued in 2013 or later.

Taxpayer relief requests can be made online using the CRA’s My Account, My Business Account (MyBA), or Represent a Client digital services:

• My Account : After signing in, select “Accounts and payments,” then “Request relief of penalties and interest.”
• My BA or Represent a Client : After signing in, on the MyBA overview page, select the appropriate program from the navigation menu, then select the correct account. Finally, select “Request relief of penalties and interest” under the “Request” heading.

You can also fill out Form RC4288, Request for Taxpayer Relief - Cancel or Waive Penalties or Interest , and send it with one of the following ways:

• online with My Account: select “Submit documents” under the “Correspondence” section
• online with My BA or Represent a Client: select “Submit documents” from the banner at the top of the page
• by mail to the designated office, as shown on the last page of the form, based on your place of residence

For more information about how to submit documents online, go to Submit documents online .

For more details on the required supporting documents about relief from penalties and interest, and the related forms and publications, go to Cancel or waive penalties and interest at the CRA .

Page details

Ontario.ca needs JavaScript to function properly and provide you with a fast, stable experience.

To have a better experience, you need to:

• Go to your browser's settings
• Enable JavaScript

Public Accounts 2023–24: Annual report

The annual report is a high-level summary of the fiscal year’s results. It includes financial statements, analyzes the state of the Ontario government’s finances and outlines achievements for the fiscal year.

On this page Skip this page navigation

I am pleased to present the 2023–24 Public Accounts for the Province of Ontario. The Public Accounts provide the people of Ontario with a clear and comprehensive view of the province’s finances. This year marks the seventh year in a row that the Public Accounts has received a clean audit opinion from the province’s Auditor General.

This document outlines the care our government has taken to continue delivering on our commitments set out in the 2023 Budget: Building a Strong Ontario while safeguarding the province’s economic position for future generations.

Here in Ontario, we are creating more jobs with bigger paycheques for workers, while keeping costs down for families and businesses. Our plan is attracting domestic and international manufacturing investments, expanding the province’s electricity capacity, kickstarting innovation and helping small businesses thrive.

The 2023–24 Public Accounts shows that our government is building Ontario by investing $195.2 billion across all programs. This represents a 4.7 per cent or $8.8 billion increase in program spending over the previous fiscal year. We are continuing on a clear path back to balance, with revenues up $52 billion since we took office.

Delivering on the most ambitious capital plan in Ontario’s history remains a priority for our government. That is why infrastructure spending increased by $4.4 billion, to a total of $23.6 billion, to build roads, public transit, hospitals, schools and other community infrastructure that people rely on. This includes eight kilometres of new lanes added to Highway 401 in Cambridge, new contract awards to build the Bradford Bypass, and our historic plan to expand the subway system by 50 per cent.

In education, our government continues to invest in the repair and construction of new schools. Approximately $1.4 billion in funding supported nearly 3,500 repair and rehabilitation projects. In the 2023–24 school year, 21 new schools and additions were opened, creating over 7,000 new student spaces, including six French-language school projects and over 700 child care spaces. That means more Ontario students have begun the school year in modern, state-of-the-art classrooms.

In health care, our government has continued to bring care closer to home. By increasing investments in the health sector by $7 billion or 8.9 per cent in 2023–24, more money is being directed towards local hospitals and health care facilities to support more convenient care closer to where people live.

To help ensure public safety, our government has increased investment in the justice sector by 10.9 per cent, to a total of $6 billion. This includes fighting auto theft, transforming correctional services in Northern Ontario, and increasing access to justice in communities across the province.

The results in the 2023–24 Public Accounts show that we remain laser focused on a targeted, responsible approach to the province’s fiscal plan, creating the conditions to attract jobs and investments, building critical infrastructure and providing the people of Ontario with the services they depend on.

Our government will continue to build Ontario, so it remains the best place to work, live and raise a family, anywhere in the world.

Original signed by:

The Honourable Caroline Mulroney   President of the Treasury Board

Introduction

The Annual Report is a key element of the Public Accounts of the Province of Ontario and is central to demonstrating the Province’s transparency and accountability in reporting its financial activities and position. Ontario’s Consolidated Financial Statements present the financial results for the 2023–24 fiscal year against the 2023 Budget released on March 23, 2023, and the financial position of the government as of March 31, 2024. As in previous years, the Annual Report also compares the current year’s results to the prior year’s results and provides a five-year trend analysis for many key financial ratios.

Producing the Public Accounts of Ontario requires the teamwork and collaboration of many stakeholders across Ontario’s public sector. The Office of the Auditor General plays a critical role in auditing and reporting on the Province’s financial statements, and the Standing Committee on Public Accounts also plays an important role in providing legislative oversight and guidance. I would like to thank everyone for their contributions and collaboration.

We welcome your comments on the Public Accounts. Please share your thoughts by email to [email protected] , or by writing to the Office of the Provincial Controller, Re: Annual Report, Treasury Board Secretariat, Second Floor, Frost Building South, 7 Queen’s Park Crescent, Toronto, Ontario M7A 1Y7.

Carlene Alexander, CPA , CGA , MBA   Deputy Minister and Secretary of the Treasury Board and Management Board of Cabinet Treasury Board Secretariat 

Statement of responsibility

The Consolidated Financial Statements are prepared by the Government of Ontario in accordance with the accounting principles for governments issued by the Public Sector Accounting Board ( PSAB ).

The Consolidated Financial Statements are audited by the Auditor General of Ontario in accordance with the  Auditor General Act,  and with Canadian generally accepted assurance standards. The Auditor General expresses an independent audit opinion on these Consolidated Financial Statements. Her report, which appears on pages 45-49, provides her audit opinion and the basis for this opinion.

Management prepares the Consolidated Financial Statements in accordance with generally accepted accounting principles for the public sector. Management is also responsible for maintaining systems of financial management and internal controls to provide reasonable assurance that transactions recorded in the Consolidated Financial Statements are within statutory authority, assets are properly safeguarded, and reliable financial information is available for preparation of these Consolidated Financial Statements. 

Carlene Alexander, CPA , CGA , MBA   Deputy Minister, Treasury Board Secretariat 

August 30, 2024

Jason Fitzsimmons   Deputy Minister, Ministry of Finance 

Beili Wong, FCPA , FCA   Comptroller General and Associate Deputy Minister, Office of the Comptroller General Treasury Board Secretariat

Khalida Noor, CPA , CA   Assistant Deputy Minister and Provincial Controller, Treasury Board Secretariat

The Government of Ontario is responsible for the Consolidated Financial Statements and accepts responsibility for the objectivity and integrity of these Consolidated Financial Statements and the Financial Statement Discussion and Analysis. Those charged with governance are responsible for overseeing the Government of Ontario’s financial reporting process.

The Honourable Caroline Mulroney   President of the Treasury Board

The Honourable Peter Bethlenfalvy   Minister of Finance

Financial statement discussion and analysis

2023–24 financial highlights (billion dollars) — table 1.

Note: Numbers may not add due to rounding.

Financial highlights

Change from 2022–23 actuals.

• The Ontario government recorded a $0.6 billion deficit for the fiscal year ended March 31, 2024, compared to the previous year’s restated deficit of $5.9 billion. The $5.2 billion decrease in annual deficit is mainly due to higher revenues and lower interest on debt, partially offset by an increase in program expenses. (see Table 1 above).
• Total revenues were $205.9 billion, which are $13.0 billion or 6.8 per cent higher than the previous year, largely due to increases in taxation revenues, transfers from the Government of Canada, Income from Investment in Government Business Enterprises and revenues reported by ministries and the broader public sector. See details on pages 8-9.
• Total program expenses were $195.2 billion, which is $8.8 billion or 4.7 per cent higher than the previous year. Expenses are higher in the Health sector mainly due to increased compensation costs and investments in base programs to meet the growing demand of health care services; in the Education sector due to funding to support enrolment growth, commitments consistent with labour agreements reached and the continued implementation of the Canada-wide Early Learning and Child Care system; in the Postsecondary education sector mainly due to higher college spending; in the Children’s and social services sector mainly due to higher social assistance caseloads and increases to the monthly core allowances for the Ontario Disability Support Program; and in the Justice sector mainly due to investments in policing and public safety initiatives. These increases are partially offset by lower spending in the Other sector mainly due to higher expenses in 2022–23 related to the recognition of contingent liabilities for Treaty rights and Aboriginal rights and other claims against the Crown. See details on pages 13-15.
• Interest on debt was lower than the previous year by $1.0 billion, or 8.2 per cent, as a result of higher interest and investment income and higher interest capitalization from consolidated entities. See details on page 21.
• Non-financial assets increased by $9.9 billion from the previous year, mainly due to an increase of $11.1 billion in the net book value of Ontario’s capital assets, such as buildings and transportation infrastructure, offset by a decrease of $1.3 billion in inventory assets in personal protective equipment. Total infrastructure expenditure increased by $4.4 billion from the previous year. Ontario invested $19.1 billion in assets owned by the government and its consolidated entities, which reflect new capital investments and repairs to existing assets. The government also made $4.5 billion in additional capital investments in transfers to non-consolidated partners and other infrastructure expenditures. See details on page 24-26.
• Total liabilities increased by $18.4 billion and total financial assets increased by $10.3 billion, resulting in an increase of $8.2 billion or 2.0 per cent in net debt from the previous year (see details on pages 27-28). The increase of liabilities is mainly due to an increase in debt. The increase of financial assets is mainly due to higher accounts receivable from taxation revenue and higher investment in Government Business Enterprises. The accumulated deficit decreased by $1.7 billion, or 0.7 per cent, from the previous year mainly as a result of the reported deficit of $0.6 billion and accumulated remeasurement gains of $2.4 billion.

Change from the  2023 Budget

• The Ontario government recorded a $0.6 billion deficit for the fiscal year ended March 31, 2024, compared to a forecasted deficit of $1.3 billion in the 2023 Budget , resulting from a combination of higher revenues and lower-than-planned interest on debt, offset by increased program spending. (See Table 1 above).
• Total revenues of $205.9 billion, were $1.6 billion or 0.8 per cent higher than planned in the 2023 Budget , mainly due to higher-than-expected income from Investment in Government Business Enterprises ( GBEs ) and revenues reported by ministries, consolidated government organizations including the broader public sector. This was partially offset by weaker-than-expected taxation revenues reflecting the latest actual tax assessment information for 2023 and prior years received from the Canada Revenue Agency ( CRA ) and lower-than-expected transfers from the Government of Canada. See details on page 10.
• Total program expenses of $195.2 billion, were $4.6 billion or 2.4 per cent higher than the  2023 Budget . Program expenses are higher in the Education, Health and Justice sectors, mainly due to Protecting a Sustainable Public Sector for Future Generations Act, 2019 (Bill 124) funding not being built into the 2023 Budget (as remedy negotiations had not yet begun), as well as funding to support commitments consistent with labour agreements reached. Higher program expense in the Health sector is also due to higher-than-forecasted hospital spending and write-off of personal protective equipment; in the Justice sector due to investments in policing and public safety initiatives; and in the Postsecondary Education sector due to higher-than-forecasted college spending. See details on pages 17-18.
• Interest on debt was lower than the 2023 Budget by $2.7 billion, or 19.1 per cent, due to lower- than-forecasted interest rates, higher interest capitalization from consolidated entities and an increase in interest and investment income from the broader public sector. See details on page 21. 

Analysis of 2023–24 results

Change from 2022–23 actuals.

Total revenues for 2023–24 increased by $13.0 billion or 6.8 per cent from the previous year.

• Taxation revenue increased by $5.3 billion or 3.9 per cent in 2023–24, in line with 2023 Nominal Gross Domestic product growth of 4.3 per cent. Higher revenues reported for Personal Income Tax ( PIT ) and Sales Tax and Ontario Health Premium ( OHP ) were partially offset by lower Corporations Tax ( CT ).
• Transfers from Government of Canada increased by $3.1 billion or 9.8 per cent in 2023–24, mostly reflecting higher transfers from major federal funding programs including Canada Health Transfer, Canada Social Transfer, Equalization, and support for Canada-wide Early Learning and Child Care and Shared Health Priorities. This increase was partially offset by reprofiling of the National Housing Strategy funding and the expiry of COVID-19 time-limited funding.
• Income from Investment in Government Business Enterprises increased by $1.3 billion or 21.1 per cent in 2023–24, mainly due to higher net income from Ontario Power Generation ( OPG ), largely reflecting the change in the asset retirement obligations adjustment resulting from the conversion of OPG ’s reporting basis from US GAAP to International Financial Reporting Standards ( IFRS ), and the Ontario Nuclear Funds realized gains. Revenue from the Liquor Control Board of Ontario ( LCBO ), Hydro One Ltd. ( HOL ), the Ontario Cannabis Retail Corporation ( OCRC ), also known as the Ontario Cannabis Store ( OCS ), and iGaming Ontario ( iGO ) are also higher compared to 2022–23. This was partially offset by lower net income from the Ontario Lottery and Gaming Corporation ( OLG ).
• Fees, donations and other revenues from broader public sector organizations ( BPS ) increased by $1.6 billion or 13.7 per cent in 2023–24, mainly due to higher third-party revenue from colleges driven by higher revenue from international student tuition and private partnerships.
• Other non-tax revenue increased by $1.8 billion or 23.6 per cent in 2023–24, mainly due to higher recoveries of prior-year expenditures, higher revenues from sales and rentals, fees, licences, permits, and other miscellaneous revenues reported by ministries and consolidated government organizations.

Description for Chart 1

Change from the 2023 Budget

Revenues for 2023–24 were $1.6 billion or 0.8 per cent higher than expected in the 2023 Budget .

• Taxation revenues were $2.4 billion or 1.6 per cent lower than forecasted in the 2023 Budget , mainly due to lower-than-expected CT and PIT reflecting the latest 2023 and prior year tax assessments information available from the CRA . This was partially offset by higher-than-expected Sales Tax reflecting upward revisions to Ontario’s official 2022 and 2023 Harmonized Sales Tax ( HST ) entitlements by the CRA .
• Transfers from the Government of Canada were $0.5 billion or 1.5 per cent lower, mainly due to reprofiling of funding under the Investing in Canada Infrastructure Program, the National Housing Strategy and the Canada-wide Early Learning and Child Care Agreement. This was partially offset by higher funding for the Labour Market Transfer Agreements and higher transfers to broader public sector organizations.
• Income from GBEs was $1.1 billion or 17.1 per cent higher, mainly reflecting higher revenues from OPG , LCBO , and iGO . Higher net income from OPG was primarily due to the change in the asset retirement obligations adjustment resulting from the conversion of OPG ’s reporting basis from US GAAP to International Financial Reporting Standards ( IFRS ), and the Ontario Nuclear Funds realized gains. LCBO ’s higher net income mainly reflects lower cost of sales and other expenses. The net income from iGO represents a new revenue stream to the Province that was consolidated into the provincial financial statements after Budget 2023 . This was partially offset by lower net income from the OLG .
• Fees, donations, and other revenues from BPS were $2.0 billion or 17.7 per cent higher, mainly due to growth in third-party revenues from colleges and hospitals. Higher college sector revenues were primarily due to higher tuition from international students and private partnerships. Higher hospital sector revenues were due to higher research grants and third-party revenues from ancillary services.
• Other non-tax revenues increased by $1.4 billion or 17.7 per cent mainly reflecting higher-than-expected recoveries of prior-year expenditures, higher revenues from fees, licences, permits, and other miscellaneous revenues reported by ministries and consolidated government organizations.

Revenue trend

Chart 2 shows the recent trends in revenue for Ontario’s major revenue sources.

Description for Chart 2

Taxation revenue

Between 2019–20 and 2023–24 taxation revenue grew at an average annual rate of 7.0 per cent, higher than the average annual rate of nominal GDP growth of 5.2 per cent.

Although economic growth and taxation revenue growth are closely linked, the relationship is affected by several factors, including but not limited to:

• Growth in some revenue sources, such as Corporations Tax and Mining Tax, which can diverge significantly from economic growth in any given year due to the inherent volatility of business profits as well as the use of tax provisions, such as the option to carry losses forward or backward;
• The impact of housing completions and resales on HST and Land Transfer Tax revenue, which is proportionately greater than their contribution to GDP ; and
• Changes in volume-based gasoline and fuel taxes which are more closely aligned to growth in real GDP as opposed to nominal GDP since these revenue sources are not directly influenced by price changes. 

Federal government transfers

Government of Canada transfers are based on existing federal-provincial funding arrangements and formulas. These include major federal transfers such as Canada Health Transfer, Canada Social Transfer and Equalization. There are also a number of federal transfers to the Province which are largely program-specific, such as Early Learning and Child Care, Shared Health Priorities, Labour Market Development and Infrastructure. Some transfers are ongoing while others are time-limited.

Between 2019–20 and 2023–24, Government of Canada transfers grew at an annual average rate of 7.8 per cent.

Income from investment in Government Business Enterprises

Income from GBEs includes OPG , HOL , LCBO , OLG , OCS and iGO .

Between 2019–20 and 2023–24, income from GBEs increased at an annual average rate of 5.9 per cent reflecting revenue growth from all existing GBEs including iGO , which was consolidated into the provincial financial statements as a GBE in 2022–23 Public Accounts.

Fees, donations and other revenues from Broader Public Sector Organizations

Between 2019–20 and 2023–24, revenue from BPS increased at an average annual rate of 8.9 per cent. This increase mainly reflects third-party revenue growth from existing BPS sectors (colleges, hospitals, and school boards). It also includes a new revenue stream to the Province from the children’s aid societies ( CAS ), which was consolidated into the provincial financial statements for the first time in the 2022-23 Public Accounts.

Other non-tax revenues

Other non-tax revenues arise from a number of sources, including sales and rentals of goods and services, fees, licences, permits, reimbursements of provincial expenditures in delivering specific services, royalties for using crown resources, and power supply contract recoveries.

Other non-tax revenues increased at an annual average rate of 6.0 per cent between 2019–20 and 2023–24. 

Total program expenses for 2023–24 increased by $8.8 billion or 4.7 per cent, from $186.4 billion in the previous fiscal year to $195.2 billion.

• $1.8 billion in additional funding to address increased compensation costs, including Bill 124 remedy settlements and agreements for physicians and nurses;
• $1.6 billion in higher spending mainly for operating expenses in hospitals including services, supplies and equipment;
• $1.3 billion in additional funding primarily to support increased utilization of health care services to meet Ontario’s growing population, including more visits to physicians and the introduction of new drugs onto the drug formularies;
• $1.1 billion increase in health sector program investments including Ontario Health Teams, emergency health services, digital health and supports to health human resources;
• $0.7 billion in additional investments to support increased long-term care staffing and improve average direct hours of care for long-term care residents;
• $0.5 billion in additional investments to expand and improve access to home and community care, including contract rate increases to support the workforce;
• $0.3 billion in additional funding for the Construction Funding Subsidy to help fast-track the construction of new or redeveloped long-term care homes; and
• The variance also reflects a $0.6 billion decrease in pandemic-related spending for long-term care homes.
• Education sector expenses increased by $2.6 billion or 7.6 per cent over the previous fiscal year. This is mainly due to funding to support enrolment growth, commitments consistent with labour agreements reached and the continued implementation of the Canada-wide Early Learning and Child Care system to reduce average out-of-pocket child care fees.
• Postsecondary education sector expenses increased by $1.5 billion or 12.5 per cent over the previous fiscal year. This is mainly due to higher college spending related to increased enrolment levels and operating costs, as well as higher spending on student financial assistance.
• Children’s and social services sector expenses increased by $1.4 billion or 7.5 per cent over the previous fiscal year, primarily due to increases to the monthly core allowances for the Ontario Disability Support Program and the maximum monthly amount for the Assistance for Children with Severe Disabilities program, increases in demand-driven programs such as Social Assistance and Developmental Services, and investments to support the Ontario Autism Program and youth leaving the child welfare system.
• Justice sector expenses increased by $0.6 billion or 10.9 per cent over the previous fiscal year, mainly due to compensation costs, including Bill 124 remedy settlements, providing support for the Ontario Provincial Police, basic constable training and First Nations policing and investments in public safety initiatives, such as improving the province’s bail system and addressing auto theft.
• A $6.3 billion decrease due to higher expenses in 2022–23 related to the recognition of contingent liabilities for Treaty rights and Aboriginal rights and other claims against the Crown; and
• $209 million decrease due to winding down of the time-limited Ontario COVID-19 Worker Income Protection Benefit program that reimbursed employers for COVID-19 paid leave days and the Ontario Jobs Training Tax Credit at the end of 2022 which supported hiring, training, retraining and upskilling workers. 

The decrease in 2023–24 is partially offset by:

• $769 million increase primarily due to increased funding to support Metrolinx operations, higher amortization expense associated with more transportation assets entering in service, higher transfer payments for municipal transit capital projects due to project milestones achieved, and financial supports provided to the City of Toronto under the New Deal;
• $632 million increase in contaminated sites liability adjustments;
• $443 million increase for Homelessness Prevention Programs including funding for shelters and homelessness programs in the cities of Toronto and Ottawa;
• $235 million increase due to higher cost in business investment tax credits, primarily from the implementation of the new Ontario Made Manufacturing Investment Tax Credit; and
• $207 million increase in energy-related expenses, primarily due to higher costs to deliver the suite of electricity price mitigation programs.

See Chart 3 for details of program expenses by sector.

Description for Chart 3

Chart 4 shows spending by type of expense. Government spending related to salaries and benefits includes those expenses for organizations consolidated as part of the government reporting entity, including hospitals, school boards, colleges and children’s aid societies, as well as the Ontario Public Service.

Description for Chart 4

The expense labelled “Transfers” in Chart 4 reflects payments to a variety of service providers that support the delivery of public services. These third-party funding recipients consist of health care professionals including physicians, social service agencies, universities, child care providers and municipalities. As service providers, a large share of the spending of these third parties typically goes to salaries and benefits, i.e., compensation-related costs. Transfers do not include transfers to hospitals, school boards, colleges, and children’s aid societies — these are reflected in expense types such as operating costs and salaries and benefits, as reported by the organizations. 

Total program spending for 2023–24 was $195.2 billion, which is $4.6 billion or 2.4 per cent higher than the 2023 Budget . Changes in program spending were primarily attributed to the following factors:

• Health sector expense was $4.4 billion or 5.5 per cent above plan, including Bill 124 funding not being built into the 2023 Budget (as remedy negotiations had not yet begun), increased utilization of Ontario Drug Benefit programs including introduction of new drugs on the provincial formularies, additional funding to support and expand home and community care, and other health sector program investments. The variance also reflects the write-off of expired and obsolete personal protective equipment and critical supplies and equipment inventory.
• Education sector expense was $2.4 billion or 7.0 per cent above plan, primarily due to Bill 124 funding not being built into the 2023 Budget (as remedy negotiations had not yet begun), as well as funding to support commitments consistent with labour agreements reached and additional capital investments.
• Postsecondary education sector expense was $1.1 billion or 9.2 per cent above plan, mainly due to higher-than-forecasted college spending to support increased enrolment levels and operating costs. This also reflects lower-than-expected spending for student financial assistance.
• Children’s and social services sector expense was $0.1 billion or 0.6 per cent above plan, primarily due to increased demand for social assistance programs such as Ontario Works, driven by an increased number of asylum seekers, and new investments in children’s rehabilitation services.
• Justice sector expense was $0.7 billion or 12.8 per cent above plan, primarily due to compensation costs, including Bill 124 remedy settlements, providing support for the Ontario Provincial Police, basic constable training and First Nations policing and investments in public safety initiatives, such as improving the province’s bail system and addressing auto theft.
• $4.0 billion decrease in contingency funds that were used during the fiscal year to fund program expenses in the various sectors for emerging needs and unforeseen events. This is a decrease from the $4.6 billion in contingency funds in 2022-23;
• $837 million decrease primarily due to updated construction schedules for programs such as the Broadband and Cellular Infrastructure Program and Transit-Oriented Communities;
• $491 million decrease in energy-related expenses, primarily due to lower-than-forecasted costs to sustain the suite of electricity price mitigation programs; and
• $185 million decrease primarily due to revised implementation timelines for the Skills Development Fund Capital Stream.

The decrease was partially offset by:

• $718 million increase in contaminated sites liability adjustments; and
• $495 million increase primarily due to financial support provided to the City of Toronto under the New Deal, and increased costs of transit and highway operations. 

Expense trend

Chart 5 shows the recent trends in spending for major program areas.

Description for Chart 5

• Support for Ontario hospitals to expand capacity, meet patients’ needs and increase access to high-quality care, closer to home;
• Additional funding to improve and transform home and community care services;
• Investments to meet demand for health care services, including increased utilization of drug programs and cancer treatment services, as well as more visits to physicians;
• Funding for health human resources initiatives to support the existing workforce and recruit and retain health care providers;
• Additional funding to improve access to mental health and addictions services through the Roadmap to Wellness: A Plan to Build Ontario’s Mental Health and Addictions System ; and
• Support for long-term care homes through increased investments in the Long-Term Care Staffing Plan, operating funding to help with financial stability and the Construction Funding Subsidy to advance construction of new and redeveloped beds.
• Implementing the Canada-wide Early Learning and Child Care system;
• Modernizing the school curriculum and additional funding for reading and math programs; and
• Providing funding to support enrolment growth and commitments consistent with labour agreements reached.    
• Postsecondary education sector expense increased from $10.5 billion in 2019–20 to $13.2 billion in 2023–24, or on average by 5.9 per cent per year. This increase is mainly due to higher college spending as a result of increased enrolment levels and operating costs. This also reflects increased spending on capital grants to help colleges and universities modernize facilities by upgrading technology, supporting critical repairs and improving energy efficiency.
• Higher social assistance funding to address demand;
• Increases to the monthly core allowances for the Ontario Disability Support Program and the maximum monthly amount for the Assistance for Children with Severe Disabilities program; and
• Investments to support client needs in the Ontario Autism Program and Developmental Services program. 
• Initiatives to address auto theft, strengthen the Province’s bail system and combat gun and gang-related violence;
• Support for essential services in courts, corrections, policing, and coroner and forensic pathology services; and
• Implementation of the Justice Accelerated Strategy and the Criminal Justice Digital Design initiative to establish new and innovative ways of delivering justice services remotely, in-person and online.
• Growth in amortization expense related to new transportation assets entering into service and increased investments in transit services and highway operations;
• Infrastructure program investments such as the Ontario Community Infrastructure Fund, Broadband and Cellular Infrastructure Program and Investing in Canada Infrastructure Program;
• Strategic investments and industrial land development, including Ontario’s auto manufacturing sector, and increases for investment tax credits;
• Increased investments in the hiring, training, retraining and upskilling of workers through the Skills Development Fund Training Stream; and
• Additional investments to support Francophone communities and businesses through initiatives such as the Francophone Community Grants Program and the Francophone Economic Development Strategy.  

Interest on debt

Interest on debt expense decreased from $12.4 billion in 2022–23 to $11.4 billion in 2023–24 as a result of higher interest and investment income and higher interest capitalization from consolidated entities.

Interest on debt expense was $2.7 billion below plan from the 2023 Budget  in 2023–24, due to lower-than-forecasted interest rates, higher interest capitalization from consolidated entities and an increase in interest and investment income from the broader public sector.

Chart 6 shows that the ratio of interest on debt to total revenue has fallen for Ontario over the period between 2019–20 to 2023–24, from a high of 8.0 per cent in 2019–20 to the current level of 5.5 per cent. The decrease from 6.4 per cent in 2022–23 to 5.5 per cent in 2023–24 is due to the rate of increase in Ontario’s total revenues which is greater when compared to the rate of change in Ontario’s interest on debt expenses.

Description for Chart 6

Statement of financial position analysis

Financial assets consist of items that include cash and cash equivalents and portfolio investments that are available to the government to meet its expenditure needs; accounts and loans receivable, which are amounts it expects to receive from third parties; and other items including derivative assets and investment in GBEs .

Total financial assets increased by $10.2 billion in 2023–24 over the prior fiscal year. The increase was attributable to a (see Table 4):

• $13.8 billion increase in accounts receivable, mainly due to increases in receivables from Corporations Tax, PIT , other taxes, transfers from Government of Canada, debt issuance and bond sales; and
• $3.2 billion higher investment in GBEs , mainly due to higher net assets from OPG , HOL , LCBO and OLG .

These increases in 2023–24 are partially offset by:

• $8.1 billion lower in portfolio investments primarily due to no debt pre-borrowing activities in 2023–24.

Chart 7 shows the recent trends in financial assets for the government. 

Description for Chart 7

The level of financial assets, including cash, accounts receivable and portfolio investments tends to be more variable, since these assets year-over-year often reflect specific circumstances at the fiscal year-end such as pre-borrowing for the following period’s needs.

After a large increase in total net investments in GBEs in 2020–21, total investment in GBEs showed smaller increases in 2021–22 and 2022–23, and again a larger increase in 2023–24. The net increases were mainly due to the increases in net assets in GBEs , including investment earnings from the Ontario Nuclear Funds for nuclear waste management and decommissioning, and in 2023–24 net income from OPG . 

Tangible capital assets

The government is responsible for a large portfolio of non-financial assets, which is almost entirely made up of tangible capital assets.

Tangible capital assets owned by the government and its consolidated entities represent the largest component of Ontario’s infrastructure investments. These assets include those it owns directly, such as provincial highways, as well as the assets of hospitals, school boards, colleges, children’s aid societies, and agencies that are consolidated in its financial statements. The assets of GBEs are reflected in Ontario’s statement of financial position as an investment in GBEs under financial assets.

The reported net book value of Ontario’s tangible capital assets was $161.6 billion in 2023–24, increasing by $11.1 billion, or 7.4 per cent over the prior fiscal year. Buildings, including hospitals, schools and college facilities, make up the single largest share at $73.3 billion in aggregate. The total on the balance sheet also includes assets under construction, some of which are being built using the public private partnership ( P3 ) model, in which the private sector finances the assets during construction. The impacts of P3s on balance sheet liabilities are discussed in the Other Long-Term Financing section.

Growth in the net book value of capital assets has averaged 6.3 per cent annually over the period between 2019–20 and 2023–24. Most of the growth has been in new and rehabilitated buildings and transportation infrastructure including provincial highways and bridges, and the transit network owned by Metrolinx, an agency of the government.

See Chart 8 for the recent trends in the net book value of provincial tangible capital assets by sector.

Description for Chart 8

Infrastructure expenditures

Ontario’s infrastructure spending in 2023–24 was $23.6 billion (see Table 5). This includes $19.1 billion invested in assets owned by the government and its consolidated entities as discussed in the Tangible Capital Assets section, and $4.5 billion provided for capital investment to non-consolidated partners such as universities and municipalities as well as other infrastructure expenditures.

Total infrastructure spending in 2023–24 was $4.4 billion higher than the previous year, with increased expenditures across all sectors. Increased investments include highways, public transit, hospitals, schools, and repairs on existing provincial assets. The increase also includes a $0.6 billion one-time accounting adjustment for contaminated sites. 

The total was higher than the $23.5 billion set out in the 2023 Budget , primarily driven by increases in the Education, Health, Postsecondary Education and Transportation sectors. These increases are partially offset by deferred capital spending in the other sectors due to changes in project construction timelines. 

Liabilities

Ontario’s liabilities consist of debt and other financial obligations, including accounts payable and the estimated cost of future payments, including pensions and other employee future benefits liability. See Table 6. 

Debt makes up the largest share of liabilities. From 2022–23 to 2023–24, debt increased by $15.8 billion to $437.6 billion at fiscal year-end, primarily to finance the operating deficit, changes in the Province’s holdings of its own bonds and treasury bills, investments in infrastructure as well as operating cash requirements.

Table 7 summarizes the government’s financing in 2023–24. 

Note:  Numbers may not add due to rounding.

The government completed an annual borrowing program of $42.6 billion in 2023–24, compared to the $32.2 billion borrowed in 2022–23. 

Other long-term financing

This category includes obligations to finance construction of public assets including those procured through the P3 model and total debt of BPS . All assets that are owned by the Ontario government and its consolidated entities, and the associated financing liabilities, are reflected on Ontario’s balance sheet during construction and as the liabilities are incurred. For information on asset investments, see the Tangible Capital Assets section. 

Other types of liabilities

Other types of liabilities include accounts payable, pensions and other employee future benefits, unspent transfers received from the federal government representing deferred revenues, derivative liabilities, and other liabilities.

Chart 9 shows the recent trends in liabilities for Ontario. This trend over the period between 2019–20 and 2023–24 shows public debt rising, mainly to fund capital investments and the annual deficits. Other types of liabilities, including accounts payable and deferred revenue, tend to be more variable since they often reflect specific circumstances at the fiscal year-end, such as accrued liabilities for goods and services.

Description for Chart 9

Risks and risk management

Ontario’s financial results and financial reporting are subject to various risks and uncertainties over which the Provincial government may have limited or no control.

A majority of Ontario’s taxation revenue is administered and collected by the federal government through various tax collection agreements. Actual tax assessments from the Canada Revenue Agency for the current tax year and prior years are provided to the Ontario Ministry of Finance well after the tax year has ended. In the absence of actual tax data from the federal government, the Ministry of Finance uses economic driven models to produce the forecasts for federally administered taxes. Ontario manages risks to the revenue forecast by consulting with private-sector economists to inform the government’s planning assumptions. For prudent fiscal planning, the Ontario Ministry of Finance’s GDP growth projections are typically set slightly below the average private-sector forecast. Ontario’s revenues rely heavily on the level and pace of economic activity in the province.

The ongoing monitoring of revenues allows the government to assess potential risks to its finances. Collaboration with the Canada Revenue Agency, which administers approximately 80 per cent of Ontario’s taxation revenues, is essential to achieving this. As well, Ontario continues to explore ways to enhance its tax revenue forecasting and monitoring.

There are also risks arising from other sources of revenue, such as federal transfers and income from GBEs . Since these represent a smaller share of total revenue compared to larger revenue sources such as tax revenue — the risks they present are relatively less material to the fiscal plan. In addition, these risks are difficult to predict and quantify; for example, federal transfers are subject to federal policy changes while GBE net incomes are subject to regulatory decisions and market conditions. Note 1 to the Consolidated Financial Statements provides additional details on measurement of uncertainty.

Additionally, given the current pace of change and the interdependent nature of the external and emerging risk environment, the Province needs to consider potential threats and opportunities as it sets priorities. Areas like artificial intelligence, geopolitical stability, cybersecurity, infrastructure, sustainability, supply chain challenges and the changing workforce create a dynamic environment that may introduce or amplify existing risks to government and requires targeted responses and mitigation to support the government’s ability to achieve its priorities.

To address these challenges, critical investments and additional expenditures enabled the provision of services and the delivery of programs. This included the development of responsive policies and enhancements to existing programs across areas such as the health, education, and justice sectors, as well as a continued focus on modernizing government services to support economic development, enable digital transformation, and address key infrastructure needs.

Other risk management tools the government utilized include contingency funds to address risks that materialized. In the 2023 Budget , the government committed a total of $4.0 billion ($3.9 billion for operating and $0.1 billion for capital) for the standard contingency fund. Funds from the standard contingency fund were used to support initiatives such as:

• Addressing the increased compensation requirements for Ontario’s Public Service and broader public sector;
• Supporting and expanding the home and community care sectors;
• Supporting municipalities through new deals to support municipal roads and transit systems, and shelters and homelessness programs;
• Managing emergency situations, including wildland fire response, for the public health and safety of Ontario’s people and places; and
• Health sector supports for increased utilization of Ontario Drug Benefit programs and cancer treatment services.

As required under the Fiscal Sustainability, Transparency and Accountability Act, 2019 , a reserve is included in the projected surplus/deficit each year to guard against unforeseen revenue and expense changes that could have a negative impact on the government’s fiscal performance. The 2023 Budget included a $1.0 billion reserve for 2023–24. Excluding this reserve, the projected deficit for 2023–24 in the 2023 Budget was $0.3 billion.

Provisions for losses that are likely to occur as a result of contingent liabilities, such as ongoing litigation and land claims, and that can be reasonably estimated, are expensed and reported as liabilities. Note 1 to the Consolidated Financial Statements provides further details.

Note 3 to the Consolidated Financial Statements explains the government’s risk management strategies, which are intended to ensure that exposure to borrowing-related risk is managed in a prudent and cost-effective manner.

Changes in Canadian generally accepted accounting principles ( GAAP ) for the public sector issued by the Public Sector Accounting Board ( PSAB ) can have an impact on Ontario’s budgets, estimates and actual results. This fiscal year, the adoption of new accounting standards, Section PS 3400 Revenue and Section PS 3160 Public Private Partnerships, resulted in an impact to the Public Accounts. Disclosures on the impact of adoption of new accounting standards are included in Note 1(f) to the Consolidated Financial Statements. The Office of the Comptroller General, Treasury Board Secretariat, actively monitors proposed changes and provides input to standard setters to support the development of standards that support sound public policy decision-making, transparency and accountability in reporting. 

Key financial ratios

In this section of the Annual Report, the use of key measures of financial position will be used to assess Ontario’s financial position. The levels and trends of these measures indicate the impacts of economic and other events on the Ontario government’s finances. The ratio and level of each over the past five fiscal years are outlined in Table 8.

Measures of sustainability

Net debt provides a measure of the future government revenues that will be required to pay for the government’s past transactions. Net debt as a percentage of Ontario’s GDP shows the financial demands on the economy resulting from the government’s spending and taxation policies. A lower ratio of net debt-to- GDP generally indicates higher sustainability.

The government’s net debt-to- GDP ratio was 37.3 per cent at the end of fiscal year 2023–24, lower than the 37.8 per cent forecast in the 2023 Budget . As shown in Table 8, this ratio has decreased by 0.8 percentage points over the prior year, largely due to net debt increasing at a slower rate than GDP . The ratio of net debt to total revenue is another key measure of sustainability, since net debt reflects the future revenue that is required to pay for past transactions and events. A lower net debt-to-revenue ratio generally indicates higher sustainability. This ratio was 198.1 per cent at the end of fiscal year 2023–24, lower than the 198.9 per cent forecast in the 2023 Budget.  The ratio decreased by 9.2 percentage points from the prior year primarily due to revenues rising faster than net debt. 

Measures of flexibility

The ratio of Interest on Debt to Total Revenue shows the share of provincial revenue that is being used to pay interest expense on debt and therefore is not available for programs. A lower ratio generally indicates that a government has more flexibility to direct its revenues to programs. The ratio has fallen for Ontario over the past five years, from a high of 8.0 per cent in 2019–20 to the current level of 5.5 per cent. Despite upward movements in interest rates from the previous year, the government’s strategy of extending duration terms of its borrowing program and locking in interest rates that continued to be historically low, for a longer period, has also contributed to lower interest costs. This strategy has extended the weighted-average term to maturity of provincially issued debt from approximately 8 years in 2009–10 to approximately 15 years in 2023–24.

Own-source revenue as a share of Ontario’s GDP shows the extent to which the government is leveraging funds from the provincial economy collected through taxation, user fees and other revenue sources it controls. A high taxation burden may make a jurisdiction less competitive, therefore increases in this ratio may reduce future revenue flexibility. During 2020–21 and 2021–22, financial support from all levels of government was provided to people and businesses in response to COVID-19, which contributed to growth in Personal and Corporate Income Tax revenues. As this support did not directly increase GDP , it led to an increase in the ratio. 

Measures of vulnerability

Transfers from the federal government as a percentage of total revenue is an indicator of the degree to which Ontario relies on the federal government for revenue. A higher ratio may imply that a provincial government is more reliant on federal transfers. Provinces may have limited control over the value of these transfers, and changes in federal policies can result in shifts in federal revenues to provinces.

Ontario’s share of revenue from federal transfers (including direct transfers to the BPS ) is 16.7 per cent in 2023–24, close to the same level as 2019–20.

Foreign currency debt to total debt is a measure of vulnerability to changes in foreign currency exchange rates. Accessing borrowing opportunities in foreign currencies allows Ontario to diversify its investor and funding base. It also ensures that the government will continue to have adequate access to capital in the event that domestic market conditions become more challenging. Ontario manages foreign currency risk by hedging its exposure to foreign currencies through the use of financial instruments. Effective hedging has allowed the government to consistently limit its exposure to foreign currency fluctuations to 0.2 per cent of debt issued for provincial purposes in 2019–20, declining to 0.1 per cent in 2020–21 and remaining unchanged in 2023–24. 

Fiscal management

Use of taxpayer dollars.

To support long-term economic growth and sustainable public finances, the government remains committed to ensuring taxpayer dollars are managed appropriately. In this regard, the government emphasizes the use of evidence-based decision-making and performance measurement to identify opportunities for modernization and improvement. This approach supports the development and implementation of programs and services aiming to improve outcomes and efficiency while maintaining fiscal sustainability.

The Audit and Accountability Committee ( AAC ) plays an important role in supporting the government’s efforts to ensure the effectiveness and efficiency of operations, and sound stewardship of public funds through effective risk management, governance and internal control practices. The AAC supports enhanced governance by providing input and direction to ensure internal audit services continue to align with emerging risks and government priorities, based on independent strategic advice provided by the Ontario Internal Audit Committee ( OIAC ), an advisory audit committee of the AAC . 

Non-financial activities

This section discusses key non-financial results of major sectors. The purpose is to provide highlights of Ontario government spending and the related activities in these sectors.

Health sector

The Province is delivering connected and convenient care that focuses on delivering the right care in the right place, faster access to care, better quality of long-term care and hiring more health care workers. The goal is to make health and long-term care more convenient by connecting people to quality care, closer to home.

Results reported in 2023–24 include, but are not limited to:

• Investing in 29 new or expanded primary care teams to reduce barriers for underserved communities and connect people to primary care, particularly those in marginalized or vulnerable populations.
• Continuing to support over 16,000 health care workers through the Clinical Scholar Program to ensure newly graduated nurses, internationally educated nurses and nurses wanting to upskill have the support they need to confidently transition into and grow in the nursing profession.
• Supporting over 1,000 personal support workers and registered practical nurses through the Bridging Educational Grant.
• Enabling health care workers already registered or licensed in another Canadian jurisdiction to start work immediately in Ontario.
• Strengthening Emergency Department ( ED ) care by delivering enhanced ED training to over 400 nurses working in smaller, rural and northern hospitals.
• Enhancing health care in Northern Ontario through enhanced travel and accommodation support for medical residents who are completing clinical assignments in Northern Ontario.
• Adding more than 300 spaces in paramedic programs at provincial colleges across Ontario to provide more opportunities to students who want to become paramedics.
• Expanding the role of registered nurses to prescribe medications for conditions such as contraception, immunizations, smoking cessation and topical wound care in a variety of settings close to home.
• Expanding the common ailments program to enable pharmacists to prescribe medications for an additional six common medical ailments.
• Enabling online submission of applications and receipts for the Ontario Drug Benefit Program.
• Announcing the lowering of the eligibility age of self-referral for publicly funded mammograms through the Ontario Breast Screening Program ( OBSP ) from 50 to 40.
• Adding four new Ontario Health Teams to connect people to care in West Parry Sound, Cochrane, and Timiskaming Districts, as well as Greater Sudbury and Sudbury East, Espanola, Manitoulin, Elliot Lake, and surrounding areas, and bringing the total number of Ontario Health Teams to 58.
• Launching eight Youth Wellness Hubs across the province to connect young people to supports and services for substance use and other mental health concerns. Accelerating the reach of the Ontario Structured Psychotherapy program through 10 network-led organizations with over 100 service locations across Ontario to offer more mental health services in every region of the province.
• Negotiating new contracts with home oxygen vendors to ensure the continuity of supply across the province.
• Providing free publicly funded flu shots and COVID-19 vaccines at local pharmacies, public health units and primary health care providers, and introducing the first publicly funded Respiratory Syncytial Virus (RSV) vaccine program for high-risk older adults and in some congregate care settings.
• Investing in local hospitals and health care facilities to support easier and faster care close to home, including a new Cardiac Catheterization Lab at St. Mary’s General Hospital in Kitchener and a new inpatient acute care unit at the Waypoint Centre for Mental Health Care in Penetanguishene.
• Starting construction on 60 long-term care homes and approximately 5,900 new beds while redeveloping and upgrading over 4,000 additional beds totaling approximately 9,900 long-term care beds.
• Finishing construction and opening 10 long-term care homes with about 970 new beds and over 920 upgraded or redeveloped beds for a total of approximately 1,890 long-term care beds.
• Completing the Accelerated Build Pilot Program to address capacity issues in urban areas by building four new long-term care homes on hospital-owned lands that are helping to meet urgent needs for more long-term care homes in Mississauga, Ajax and Toronto.
• Launching the Equipment and Training Fund to help long-term care homes purchase diagnostic equipment and better train staff to assess, manage and treat residents’ conditions that most often lead to preventable emergency department visits.
• Helping over 900 people launch careers as personal support workers in long-term care homes and in the home and community care sector through training and recruitment incentives.

Education sector

Ontario’s publicly funded early years and education system is focused on preparing Ontario’s children and students for success, and ensuring that young people develop in-demand skills that can be applied to the labour market for good, high-paying jobs. The government is committed to ensuring Ontario continues to have a leading education system, both in English and French, that focuses on important foundational skills like reading, writing and math.

Results reported in 2023–24 include:

• Revising existing Ontario curriculum including elementary language/Français curriculum and new Grade 9 English/Français courses for implementation in the 2023–24 school year.
• Revising elementary Social Studies curriculum for implementation in the 2023–24 school year and introducing expanded mandatory learning on the Holocaust, Holodomor and Black history in the compulsory Grade 10 History course and new mandatory learning on Black history in Grade 7 and 8 History for the 2025–26 school year.
• Launching mandatory Mental Health Literacy Modules for students in Grades 7 and 8 beginning in the 2023–24 school year to help students manage stress, care for their mental health and know when and how to get support.
• Implementing a new Grade 10 Computer Studies course starting in the 2023–24 school year, to help students identify connections between digital technologies and different industries and occupations.
• Releasing new financial literacy learning modules for Grade 9 and 10 students to strengthen students’ financial literacy skills.
• Continuing investments in focused supports in the classroom and at home to help students build the math and literacy skills and knowledge they need to succeed.
• Enacting Bill 98 – the Better Schools and Student Outcomes Act, 2023 – which enabled a number of improvements to Ontario’s publicly funded education system including new ways to measure and track student achievement, build schools quicker, and improve transparency for parents.
• Improving access to child care with 505,055 licensed child care spaces for children 0-12 years of age, a 6.8 per cent increase since March 31, 2022.
• Reducing average child care fees through the continued implementation of the Canada-wide Early Learning and Child Care system by an average of 50 per cent from 2020 levels, saving parents about $6,500 per eligible child on average for a full year.
• Supporting the recruitment and retention of qualified professionals working in licensed child care through the announcement of the Workforce Strategy in November 2023.
• Successfully negotiating deals in 2023–24 with all teacher unions, averting strikes or the withdrawal of services.
• Engaging Indigenous partners in fall 2023 as well as education sector stakeholders to discuss key education priorities for First Nation, Métis, Inuit and urban Indigenous students in Ontario.
• Doubling the investment in capital priorities for a total of $1.3 billion for 2023–24, to help start building more schools faster.

Postsecondary education sector

Ontario’s postsecondary system prepares students and job seekers with the high-quality education, skills and opportunities needed to get good jobs and provides Ontario’s businesses with the skilled workforce and talent they need to thrive and prosper. The postsecondary system is a critical part of the province’s social and economic fabric, contributing to stronger and healthier communities.

• Increasing postsecondary education attainment rate in 2023–24 to 75 per cent — up from 74 per cent in 2022–23.
• Providing financial assistance through the Ontario Student Assistance Program to approximately 440,000 full-time students in the 2023–24 fiscal year.
• Supporting 3,800 students through the Ontario Learn and Stay Grant with over $30 million in grant funding issued, exceeding the original target of 2,500 recipients.
• Supporting 307 research projects for ground-breaking work at leading research institutes and organizations across the province, including at colleges, universities and research hospitals, through the Ontario Research Fund and Early Researcher Awards.
• Supporting the training of more doctors with an expansion of 260 undergraduate seats and 449 postgraduate positions in medical schools over the next five years.
• Continuing to support the delivery of nursing education by adding up to 3,000 additional enrolment spaces for Practical Nursing and Bachelor of Science in Nursing students beginning in fall 2023.
• Supporting commercialization through Intellectual Property Ontario, which onboarded 229 new clients, for a total of 269 clients.
• Supporting about 6,500 high-quality research internships through Mitacs, an organization that builds research partnerships between postsecondary institutions and industry, with $32.4 million over three years.
• Supporting STEM with an investment of $100 million in 2023–24 for program costs at publicly assisted colleges and universities.

Children’s and social services sector

The Ministry of Children, Community and Social Services works to improve outcomes for children, youth, families and individuals who need support and leads initiatives that increase women’s social and economic opportunity across Ontario. In supporting people through key transition points in life, the ministry helps build an Ontario where children, youth, women and families feel safe, supported and set up for success.

• Helping people with disabilities keep pace with the rising costs of living by increasing Ontario’s total social assistance disability payments by almost 12 per cent, since September 2022, for the Ontario Disability Support Program and the Assistance for Children with Severe Disabilities program.
• Continuing to support the enrolment of children into core clinical services by investing in the Ontario Autism Program and providing thousands of children with school supports as they enter kindergarten or grade one for the first time.
• Launching Ontario STANDS (Standing Together Against gender-based violence Now through Decisive actions, prevention, empowerment and Support), a four-year, cross-government action plan to better respond to gender-based violence, build safer and healthier communities, and support women’s wellbeing and economic opportunities.
• Taking further steps to end gender-based violence and support victims by signing a four-year bilateral agreement between Canada and Ontario to implement the National Action Plan to End Gender-Based Violence.
• Launching a call for applications to help equip low-income women with the skills and knowledge to find a job or start a business in high-demand sectors.
• Helping women experiencing social and economic barriers connect to supports and develop the skills they need to gain financial security and independence through an expansion of the Investing in Women’s Futures Program to 10 additional locations.
• Launching the Ready, Set, Go program to connect youth in the child welfare system, ages 18 to 23, with services and supports they need to prepare for and succeed after leaving care.
• Enabling school-aged children and youth to have healthy meals and snacks throughout the school year by partnering with community organizations to launch the Healthy Students Brighter Ontario campaign through the Student Nutrition and First Nations Student Nutrition Programs.

Justice sector

The justice sector supports the administration and delivery of justice services, including the administration of courts, prosecution of offences, provision of legal services and supports to victims and vulnerable persons, as well as administering the public safety, policing and correctional systems to ensure that Ontario’s diverse communities are supported and protected.

• Extending availability of video and audio court hearings to every region, enabling 124 courtrooms across Ontario to support hybrid hearings, making available 48 satellite units to support virtual court proceedings in 27 First Nation fly-in communities in Northern Ontario, and providing high-speed internet and video conferencing capabilities;
• Expanding electronic filing service to include more than 800 types of civil, family, bankruptcy, Divisional Court and Small Claims Court documents; and
• Developing a single online platform to allow court users to file documents, pay fees and increase access to hearings.
• Introducing new measures, such as the creation of an Organized Crime Towing and Auto Theft Team, to combat and prevent auto theft by identifying, disrupting and dismantling organized crime networks.
• Removing financial barriers for those considering a career as a police officer and increasing the capacity of the Basic Constable Training program to approximately 2,000 graduates in 2024. 
• Removing financial barriers for those considering a career as a police officer and increasing the capacity of the Basic Constable Training program to approximately 2,000 graduates in 2024.
• Fighting hate-motivated crimes as part of Ontario’s Guns, Gangs and Violence Reduction Strategy by supporting victims and survivors of intimate partner violence/domestic violence, human trafficking and child exploitation through the Victim Support Grant program.
• Strengthening the province’s bail system by providing support to Ontario Provincial Police detachments, municipal and First Nation police services, as well as establishing serious violent crime bail support teams to ensure Crown attorneys are available to prepare for bail hearings.
• Supporting the work of the Alcohol and Gaming Commission of Ontario in licensing and regulating a new retail marketplace for alcohol, including expanding the sale of beer, wine, cider and ready-to-drink beverages to grocery, convenience and big box stores across Ontario.
• Supporting Ontario’s regulated iGaming market, which sustained almost 15,000 jobs in its second year of operation and added a combined $1.24 billion to federal, provincial and municipal government revenues.

Condition and capacity of provincial tangible capital assets

Infrastructure investments should be made using an evidence-based approach. This includes a focus on asset management to ensure the delivery of high-quality public services, while efficiently managing the costs.

• The Province compiled its first infrastructure asset inventory in 2016 as a key step in managing provincial assets more effectively. The infrastructure asset inventory is now updated annually and currently contains information such as the location, age, condition and value of over 15,000 tangible capital assets, including buildings and Ontario’s entire road and bridge network. This covers the majority of the infrastructure assets owned or consolidated (i.e., certain BPS organizations) by the Ontario government, as well as some other assets that are funded in part, but not owned or consolidated, by the government.
• The Province uses the infrastructure asset inventory to track, monitor and report on the physical condition of assets. For example, the infrastructure asset inventory contains indicators such as Facility Condition Indexes ( FCIs ), Bridge Condition Indexes ( BCIs ) and Pavement Condition Indexes ( PCIs ), which help to inform the state of infrastructure assets.
• Ontario has expanded its infrastructure asset data to include other relevant data and analysis, such as the current and projected capacity and utilization of assets. This integrated data provides a base to support evidence-based infrastructure planning decisions which help ensure that infrastructure investments provide value for money and are made at the right time and the right place.

Transparency and accountability

Ontario continues to take steps that enhance government transparency and fiscal accountability in its financial reporting. Throughout the fiscal year, the government provides regular updates on Ontario’s finances. The Annual Report and Consolidated Financial Statements, along with supplementary information, are central to demonstrating the government’s transparency and accountability in reporting its financial activities and its position at the end of the fiscal year.

Recent developments in public sector accounting standards

The Ontario government’s financial reports are prepared in accordance with the accounting standards for governments set by the Public Sector Accounting Board ( PSAB ) and contained in the Chartered Professional Accountants of Canada ( CPA Canada) Public Sector Accounting Handbook.

Public Private Partnerships

In April 2021, PSAB issued a standard, Section PS 3160 Public Private Partnerships (PS 3160) effective for fiscal years beginning on or after April 1, 2023. The standard provides guidance related to the accounting and disclosure of certain public private partnerships, where the private sector partner is responsible for procuring infrastructure, financing the infrastructure cost past the point of when it is ready for use and operating and/or maintaining the infrastructure.

Effective April 1, 2023, the Province adopted Section PS 3160 using retroactive method with restatement of 2022–23 figures. The significant accounting policy disclosures are included in Note 1(e).

Purchased intangibles

The Public Sector Accounting Board ( PSAB ) issued a new guideline, the Public Sector Guideline-8 ( PSG 8), Purchased Intangibles. These amendments and the new guidelines are effective April 1, 2023 and require purchased intangibles assets to be capitalized.

Purchased intangible assets are non-financial assets lacking physical substance that are purchased through an arm’s length exchange transaction between knowledgeable, willing parties that are under no compulsion to act. Effective April 1, 2023, the Province adopted PSG -8 prospectively. The significant accounting policy disclosures are included in Note 1(e).

Effective April 1, 2023, the Province adopted Public Sector Accounting Standard Section PS 3400, Revenue. This standard provides a framework for recognizing revenue by distinguishing between revenue arising from transactions that include performance obligations, referred to as exchange transactions, and those that do not have performance obligations, referred to as non-exchange transactions. The Province adopted Section PS 3400 using the retroactive method with restatement of 2022–23 figures. The significant accounting policy disclosures are included in Note 1(e).

The C.D. Howe Institute Fiscal Accountability Report

Annually, the C.D. Howe Institute issues its commentary on the fiscal reporting transparency of senior Canadian governments, with a focus on the relevance, accessibility, timeliness and reliability of these government financial reports, including the Public Accounts. Each government is assigned a letter grade based on the quality of the numbers presented in these reports, access and user friendliness, and the ability to use them for various decision-making purposes.

The last report was released in October 2023. In the report, for the second consecutive year, Ontario had maintained its grade.

At the time of the Auditor General opinion date for the 2023–24 Public Accounts, the 2024 Fiscal Accountability Report covering the Public Accounts of Ontario 2022–2023  had not been issued.

Chart descriptions

Chart 1: 2023–24 revenue by source.

This chart shows the percentage composition of Ontario’s Total Revenues in 2023–24 by source. Total revenue is $205.9 billion.

Personal Income Tax accounts for 24.7 per cent. Sales Tax accounts for 19.4 per cent. Federal Transfers account for 16.7 per cent. Other taxes account for 10.8 per cent. Corporations Tax accounts for 11.2 per cent. Fees, donations and other revenues from BPS account for 6.3 per cent. Other non-tax revenue accounts for 4.5 per cent. Education Property Tax accounts for 2.8 per cent. Income from Investment in Government Business Enterprises accounts for 3.6 per cent. 

Note:  Percentages may not add to 100 per cent due to rounding.

Return to Chart 1

Chart 2: Revenue by source — 5-year comparison

This bar graph shows recent trends in revenue for Ontario’s major revenue sources. The source categories include taxation, federal transfers, income from investment in Government Business Enterprises, fees, donations and other revenue from hospitals, school boards and colleges, children’s aid societies, and other revenues for the period between 2019–20 to 2023–24.

Notes: Government Business Enterprises are: Hydro One Limited, Liquor Control Board of Ontario, Ontario Lottery and Gaming Corporation, Ontario Power Generation Inc. , iGaming Ontario and Ontario Cannabis Retail Corporation. Provincial revenue from Hydro One Limited’s net income is proportional to the government’s ownership share.

Return to Chart 2

Chart 3: 2023–24 Program expense by sector

This chart shows the percentage composition of Ontario’s program expenses in 2023–24 by sector. Program expense equals total expense minus interest on debt expense. Total program expense in 2023–24 was $195.2 billion.

The details of the program expenses by sector are as follows: Health accounts for 43.8 per cent; Education accounts for 19.0 per cent; Other programs account for 17.3 per cent; Children’s and social services account for 10.0 per cent; Postsecondary education accounts for 6.8 per cent; and Justice accounts for 3.1 per cent.

Notes: The Teachers’ Pension Plan expense is included in Other programs and aligns with the presentation in Table 3.8 of the 2023 Budget . Percentages may not add to 100 per cent due to rounding.

Return to Chart 3

Chart 4: 2023–24 Spending by type of expense

This chart shows the percentage composition of Ontario’s total expenses in 2023–24 by type of expense. Total expense is $206.6 billion.

Transfers account for 38.9 per cent. Salaries and benefits account for 34.8 per cent. Operating costs account for 19.2 per cent. Interest on debt account for 5.5 per cent. Other expenses account for 1.6 per cent.

Notes:  Compensation related costs for non-consolidated entities (for example, municipalities, universities) and payments to doctors for physician services are included in Transfers. Percentages may not add to 100 per cent due to rounding.

Return to Chart 4

Chart 5: Expense by sector — 5-year comparison

This bar graph shows the trend in total spending for major program areas: Health, Education, Children’s and social services, Postsecondary education, Justice, Other programs, and interest expense for the period between 2019–20 to 2023–24.

Notes: The Teachers’ Pension Plan is included in Other programs to align with the presentation in Table 3.8 of the 2023 Budget . 

Return to Chart 5

Chart 6: Interest on debt to total revenue — 5-year trend

This graph shows the trend in the total interest on debt cost to total revenue from 8.0% in 2019–20 to 5.5% in 2023–24.

Return to Chart 6

Chart 7: Financial assets — 5-year comparison

This bar graph shows the trend in Ontario’s financial assets by category: cash, investments, accounts receivable, loans receivable, derivative assets, other assets, and investment in Government Business Enterprises from 2019–20 to 2023–24.

Note: Government Business Enterprises include: Hydro One Limited, Liquor Control Board of Ontario, Ontario Lottery and Gaming Corporation, Ontario Power Generation Inc. , iGaming Ontario and Ontario Cannabis Retail Corporation.

Return to Chart 7

Chart 8: Trends in the net book value of Provincial Tangible Capital Assets — 5-year comparison

This bar graph shows the trends in net book value of provincial tangible capital assets by sector: Transportation and transit, Health, Education, Postsecondary education and Other for the period between 2019–20 to 2023–24.

Return to Chart 8

Chart 9: Liabilities — 5-year trend

This bar graph shows the recent trends in total liabilities for Ontario by type: debt, other long-term financing and other types of liabilities from 2019–20 to 2023–24.

Return to Chart 9

• footnote [1] Back to paragraph ^ Comparatives on Budget and prior year Actuals have been reclassified to be reflected on the same basis as that used to report the Actual current year balances. Actual results for 2022–23 are also restated to reflect the implementation of Public Sector Accounting Standard ( PSAS ) Section PS 3610 Public Private Partnership ( P3 ) and Section PS 3400 Revenue. See Note 17 to the Consolidated Financial Statements.
• footnote [2] Back to paragraph ^ Ontario Teachers’ Pension Plan impact is included in Other programs to align with the presentation in Table 3.8 of the 2023 Budget . In the Consolidated Financial Statements, this item appears under the Education sector. Schedule 4 to the Consolidated Financial Statements provides details.
• footnote [3] Back to paragraph ^ Comparatives on prior year Actuals have been reclassified to be reflected on the same basis as that used to report the Actual current year balances. Actual results for 2022–23 are also restated to reflect the implementation of PSAS Section PS 3400 Revenue. See Note 17 to the Consolidated Financial Statements.
• footnote [4] Back to paragraph ^ Includes adjustments for the net book value of assets disposed during the year, as well as changes in valuation.
• footnote [5] Back to paragraph ^ Mainly transfers for capital purposes to municipalities and universities and expenditure for capital repairs.
• footnote [6] Back to paragraph ^ Includes social and justice sectors, high-speed internet, government administration, natural resources, and the culture and tourism industries.
• footnote [7] Back to paragraph ^ Includes other partner funding which refers to third-party investments primarily in consolidated entities such as hospitals, colleges, school boards and children’s aid societies.
• footnote [8] Back to paragraph ^ Includes federal and municipal contributions to provincial infrastructure investments.
• footnote [9] Back to paragraph ^ Actual results for 2022–23 are restated to reflect the implementation of PSAS Section 3610 Public Private Partnership ( P3 ) and Section 3400 Revenue. See Note 17 to the Consolidated Financial Statements.
• footnote [10] Back to paragraph ^ Decrease in cash from a net decrease of $3.6 billion in changes to assets and liabilities and an operating deficit of $0.6 billion. See the Consolidated Statement of Cash Flow.
• footnote [11] Back to paragraph ^ New Tangible Capital Asset investments of $17.8 billion less proceeds of $0.3 billion from the sale of tangible capital assets.
• footnote [12] Back to paragraph ^ Decrease in cash due to investment retirement in excess of purchases of $8.1 billion and the build-up of cash reserve of $1.6 billion.
• footnote [13] Back to paragraph ^ Including net decrease in financing of capital projects through Public Private Partnership ( P3 ). See Note 4 to the Consolidated Financial Statements.