Generally, if you provide a benefit or an allowance for housing or utilities to your employee, the benefit or allowance is taxable. This includes situations where you provide your 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 the accommodation.

What is the FMV

GST/HST on the taxable benefit

If the benefit is taxable, the value of the benefit may include the GST/HST or PST that you are required to pay. You must also include any PST that would have been payable if you were not exempt. For example, meals, utilities, travel assistance and short-term accommodations may be subject to GST/HST.

On this page

• Steps
• References

Steps

1. Determine if any exceptions apply to the benefit or allowance

   If you provide a benefit or allowance for housing or utilities in one of the following situations, special conditions or rules may apply:

   • Your employee works at a remote work location
   • Your employee works at a special work site
   • Your employee works in a prescribed zone
   • Your employee is a member of the clergy, a regular minister or a member of a religious order

   • If the benefit or allowance is in one of the above situations, do not continue to the next step.

     Learn more on the above exceptions using the links.

   • If the benefit or allowance is not in one of the above situations, continue to Step 2 - Determine if the benefit or allowance is taxable.

2. Determine if the benefit or allowance is taxable

   Generally, the benefit or allowance is taxable if one of the following applies:

   • You provide your employee, including the superintendent of an apartment block, with a house, apartment or similar accommodation either rent free or for less than the FMV of the accommodation.
   • You reimburse or provide an allowance to your employee for housing or utilities
   • You pay amounts for utilities for your employee

   • If the benefit or allowance is not for taxable housing or utilities benefits, do not continue to the next step.

     Refer to: Determine if a benefit is taxable

   • If the benefit is for:

     • Housing, continue to: Step 3 - Determine if your employee is eligible for a reduction to the housing benefit.
     • Utilities, continue to: Step 4 - Calculate the value of the benefit.

3. Determine if your employee is eligible for a reduction to the housing benefit

   Depending on the situation, your employee may be eligible for a reduction to the value of the housing benefit in the following order:

   1. Suitability of size - Accommodation larger than needed

      Your employee has to occupy accommodations that are larger than they need (such as a single person in a three bedroom house).

      When you calculate the housing benefit, you can reduce the value of accommodations to equal the value of the accommodations that are appropriate to your employee's needs.

      Accommodation smaller than needed

      If your employee has to occupy accommodations that are smaller than they need, the CRA does not allow you to reduce the value of the housing benefit.

   2. Loss of privacy and quiet enjoyment

      Your employee has to occupy accommodations that contain things like equipment, public access, or storage facilities that infringe on your employee's privacy or quiet enjoyment of the accommodation.

      When you calculate the housing benefit, you can reduce the value of accommodations by an amount that reasonably relates to the degree of disturbance that affects your employee.

4. Calculate the value of the benefit

   If the benefit is taxable, the value of the benefit is equal to:

   Calculate the housing benefit

   • FMV of the housing, including any applicable GST/HST and PST
   • minus Value eligible for the reduction amount in respect of suitability of size (step 3a)
   • minus Value eligible for the reduction amount in respect of loss of privacy and quiet enjoyment (step 3b)
   • minus Any amounts your employee reimbursed you
   • equals This is the total value of the housing benefit to be included on the T4 slip using code 30 and box 14

   Calculate the utilities benefit

   • Amount for the utilities, including any applicable GST/HST and PST
   • minus Any amounts your employee reimbursed you
   • equals This is the total value of the utilities to be included on the T4 slip using code 40 and box 14

   If you provided a taxable allowance, the value of the benefit is the amount of the allowance.

   The amounts must be included in the pay period they were received or enjoyed.

   Example 1 - Calculations for housing or utilities

   Fred works at Barney Investments in the city of Barrie, Ontario, where he lives in an apartment provided by his employer for 6 months. With the help of the Evaluations Division, you determined that the FMV for Fred's apartment is $750 per month. The employer also covers the cost of utilities, which is approximately $150 per month. Each month, Fred pays his employer $500 as rent for the apartment.

   Calculate the housing benefit

   • $4,500 ($750 X 6 months) is the FMV of Fred’s apartment
   • minus $3,000 ($500 X 6 months) because Fred reimbursed his employer for the rent
   • equals $1,500 is the total value of the housing benefit to be included on Fred’s T4 slip using code 30 and box 14

   Calculate the utilities

   • $900 ($150 X 6 months) is the amount for the utilities
   • minus $0 because Fred does not reimburse his employer for the utilities
   • equals $900 is the total value of the utilities to be included on Fred’s T4 slip using code 40 and box 14
   Example 2 - Calculations for housing

   Tim works as a superintendent in a large apartment building. His employer provides him with a two-bedroom apartment at no charge for 6 months, which he usually rents out for $1,200 per month.

   This amount is a reasonable estimate of the FMV of the apartment per month. The apartment is of a suitable size for Tim’s family and there is no loss of privacy or quiet enjoyment of the accommodations on account of his employment.

   Calculate the housing benefit

   • $7,200 ($1,200 X 6 months) is the FMV of Tim’s apartment
   • minus $0 because Tim does not reimburse his employer for the rent
   • equals $7,200 is the total value of the housing benefit to be included on Tim’s T4 slip using code 30 and box 14
   Example 3 - Calculations for housing with a reduction

   Tim works as a superintendent in a large apartment building. His employer provides him with a four-bedroom apartment at no charge for 6 months, which he usually rents out for $1,800 per month. This was done as the suite was listed as the caretaker’s suite and no more suitably sized suite was available. The employer determined, based on the FMV of an apartment with only two bedrooms, that only $1,200 is appropriate.

   Calculate the housing benefit

   • $10,800 ($1,800 X 6 months) is the FMV of Tim’s apartment
   • minus $3,600 (($1,800 - $1,200 = $600) x 6 months) is the value eligible for the reduction amount in respect of suitability of size (step 3a)
   • minus $0 because Tim does not reimburse his employer for the rent
   • equals $7,200 is the total value of the housing benefit to be included on Tim’s T4 slip using code 30 and box 14

5. Withhold payroll deductions and remit GST/HST

   The withholding and remitting requirement depends on the type of remuneration: cash, non-cash, or near-cash.

   If the benefit is taxable, you must withhold the following deductions:

   • Non-cash and near-cash: Option 1

     Withhold:

     • Income tax
     • CPP
     • EI (do not withhold unless cash earnings were also paid in the pay period)

     Remit:

     • GST/HST in certain situations

   • Cash: Option 2

     Withhold:

     • Income tax
     • CPP
     • EI

     Do not remit:

     • GST/HST (do not remit)

   The amounts must be included in the pay period they were received or enjoyed.

   Learn how to calculate deductions and the GST/HST to remit: How to calculate - Calculate payroll deductions and contributions

6. Report the benefit on a T4 slip

   If the benefit is taxable, you must report the following on the T4 slip:

   • Non-cash and near-cash: Option 1

     Report on:

     • Box 14 - Employment Income
     • Box 26 - CPP/QPP pensionable earnings
     • Code 30 - Board and lodging
     • Code 40 - Other taxable allowances and benefits, including utilities

   • Cash: Option 2

     Report on:

     • Box 14 - Employment Income
     • Box 24 - EI insurable earnings
     • Box 26 - CPP/QPP pensionable earnings
     • Code 30 - Board and lodging
     • Code 40 - Other taxable allowances and benefits, including utilities

   Learn how to report the benefit or allowance: T4 slip - Information for employers

References

Legislation