On this page

• Determine if the benefit is taxable
• Calculate the value of the benefit
• Withhold payroll deductions and remit GST/HST
• Report the benefit on a slip
• References

Determine if the benefit is taxable

Generally, transportation and airline passes you provide to your employees are a taxable benefit. Depending on your situation, there may not be a taxable benefit for certain passes provided to employees of transit or airline companies under the CRA's administrative policy .

Situations

Situation: You are an airline company and you provide standby airline passes or space-confirmed airline passes

Non-taxable situation

Under the CRA's administrative policy, if you provide standby airline passes or space-confirmed airline passes, the benefit is not taxable in the following situations:

• You provide standby airline passes to a current employee for their personal travel
• You provide standby or space-confirmed airline passes to a retired airline employee for their personal travel

Taxable situation

If the standby airline passes or space-confirmed airline passes are not provided in one of the situations above, the benefit is taxable.

For example, if you provide space-confirmed airline passes to a current employee for their personal travel, the benefit is taxable.

Continue to Calculate the value of the benefit.

Situation: You are a transportation company and you provide free or discounted passes

Non-taxable situation

Under the CRA's administrative policy, if you provide free or discounted passes, the benefit is not taxable if all of the following apply:

• You are a company in the business of operating a bus, streetcar, subway, commuter train, commuter bus, or ferry service
• The free or discounted passes are for use only by your employee or retired employee
• If the pass is for a ferry, it is for passenger (walk on) fares only, and not for the transportation of a vehicle

Taxable situation

If the free or discounted passes do not meet all of the conditions above, the benefit is taxable.

If you provide free or discounted passes to a current employee who works in an area other than the transportation business or its operations, the benefit is also taxable.

Examples

• Not taxable: Option 1

  • City owns a transit company and a pass is given to a current employee in the accounting department of the transit business operations

• Taxable: Option 2

  • City owns a transit company and a pass is given to a current employee in the city's accounting department

Continue to Calculate the value of the benefit.

Calculate the value of the benefit

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

• Fair market value of the benefit received or enjoyed
• minus Any amounts your employee reimbursed you
• equals Value of the benefit to be included on the T4 slip

Example 1 – Calculations

A municipal transit authority provides its employees and their families with discounted passes. Employees receive a 50% discount on monthly passes, while family members of the employee receive a 20% discount on the same passes. The cost of the pass is $150 per month for the general public. A married employee buys two discounted passes each month. The cost to the employee is $75/month for their pass (50% discount) and $120/month for their spouse's pass (20% discount). The total discount is $1,260: $900 ($75 discount x 12 months) for the employee passes and $360 ($30 discount x 12 months) for the spouse's passes.

The discounted passes for the employee are not a taxable benefit under CRA's administrative policy, but the discounted passes for the spouse of the employee are a taxable benefit to be included on the T4 slip of the employee. The taxable benefit is calculated as follows:

• $1,260 ($900 + $360) is the total value of the discount
• minus $900 is the amount of the discount for the employee's pass that is not a taxable benefit
• equals $360 is the value of the taxable benefit
• minus $0 because the employee does not reimburse the employer
• equals $360 is the value of the benefit to be included on the T4 slip

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

Example 2 – Calculations

A ferry service offers free walk-on fares to its employees and a 20% discount when ferrying an employee with a vehicle. The cost to the general public is $25 for walk-on fares and $75 for vehicles. Over the course of the year, an employee takes advantage of the free walk-on fares 12 times and brings a vehicle onto the ferry on four other occasions. The total discount is $360: $300 ($25 x 12 trips) for the free walk-on fares and $60 ($15 discount x 4 trips) for the vehicle fares.

The discounted walk-on fares for the employee are not a taxable benefit under CRA's administrative policy, but the discounted fares for ferrying a vehicle are a taxable benefit to be included on the T4 slip of the employee. The taxable benefit is calculated as follows:

• $360 ($300 + $60) is the total value of the discounted ferry services
• minus $300 is the amount for the walk-on fares that are not a taxable benefit
• equals $60 is the value of the taxable benefit
• minus $0 because the employee does not reimburse the employer
• equals $60 is the value of the benefit to be included on the T4 slip

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

Example 3 – Calculations

An airline offers standby passes to its current employees and one travel companion. Regardless of the price of the ticket, employees pay a $50 service fee for each boarding pass they obtain using their standby pass. An employee successfully gets on three flights during the year. Each time they bring a companion. All flights are domestic (subject to GST/HST). The airline determines the fair market value of the three flights combined is $800 for each of the employee and the companion. After factoring the service fees paid, the employee receives a discount of $1,300: $650 ($800 - $150 service fee) for the employee's trips and $650 ($800 - $150 service fee) for their companion's trips.

The discounted standby passes for the current employee for their personal travel are not a taxable benefit under CRA's administrative policy, but the discounted standby passes for their companion are a taxable benefit to be included on the T4 slip of the employee. The taxable benefit is calculated as follows:

• $1,300 ($650 for the employee + $650 the companion) is the total discount on the airline passes
• minus $650 is the amount for the employee's standby pass discount that is not a taxable benefit
• equals $650 is the value of the taxable benefit
• minus $0 because the employee does not reimburse the employer
• equals $650 is the value of the benefit to be included on the T4 slip

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

Withhold payroll deductions and remit GST/HST

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

You must withhold the following deductions:

• Non-cash and near-cash: Option 1

  Withhold:

  • Income tax
  • CPP
  • EI (do not withhold)

  Remit:

  • GST/HST in certain situations

• Cash: Option 2

  Withhold:

  • Income tax
  • CPP
  • EI

  Do not remit:

  • GST/HST

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 on benefits: How to calculate – Calculate payroll deductions and contributions.

Report the benefit on a slip

You must report the following amounts on the T4 slip:

• Non-cash and near-cash: Option 1

  Report on:

  • Box 14 – Employment Income
  • Box 26 – CPP/QPP pensionable earnings
  • Code 40 – Other Information

• Cash: Option 2

  Report on:

  • Box 14 – Employment Income
  • Box 24 – EI insurable earnings
  • Box 26 – CPP/QPP pensionable earnings
  • Code 40 – Other Information

Learn how to report the benefit on a slip: Fill out the slips and summaries – File information returns (slips and summaries).

References

Legislation