In March 2021, 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 2021.

The taxable benefit you will report on Clara's 2020 T4 slip will be $12,500, calculated as follows:

1/2 × ($40,000 − $15,000)

In June 2020, you agreed to compensate Paul, your employee, for any eligible housing loss that he incurred on the sale of his house. Paul started to work at his new work location on December 1, 2020.

Paul's eligible housing loss amounted to $65,000. You paid out the compensation in two payments: $30,000 in September 2020 and $35,000 in February 2021.

Paul's taxable benefit in 2020 was $7,500 (half of the amount paid in 2020 that is more than $15,000).

Paul's taxable benefit in 2021 is $17,500. This is calculated as follows:

• half of the total of amounts paid in 2020 and 2021 that is more than $15,000
  (1/2 × [$65,000 − $15,000] = $25,000)

minus

• the amount included in income in 2020 ($7,500)