Calculating the employee home-relocation loan deduction

When you include in an employee's income a taxable benefit for a home-relocation loan the employee received because of employment, he or she can deduct whichever of the following amounts is the least:

• the benefit calculated for the home-relocation loan using the formula found in Loans received because of employment;
• the interest (calculated at the prescribed interest rates) as if the home-relocation loan were for $25,000; or
• the benefit that you included in the employee's income for all loans received because of employment in the year.

Enter the result in the "Other information" area under code 37 at the bottom of the employee's T4 slip. For more information, see T4 - Information for employers. This is the amount the employee can deduct on his or her income tax and benefit returns as an Employee home-relocation loan deduction.

Forgiven Loans

Where a loan to an employee is partly or fully forgiven, the amount is employment income for the employee in the year forgiven. For more information, see Interpretation Bulletin IT-421, Benefits to individuals, corporations and shareholders from loans or debt.

Reporting the benefit

If an employee receives a loan or incurs a debt because of 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.

Prescribed interest rates

To get the current prescribed rates of interest, go to Prescribed interest rates.

Date modified:

2016-12-15