Offering desirable benefits can help your company attract and retain good employees, but what if you could also set those benefits up so they are not taxable for your employees.
Among the most common employee benefits our clients ask about are fitness memberships and facilities and the Canada Revenue Agency recently confirmed these types of benefits can be non-taxable to employees if they meet certain conditions.
There are several employment benefits that are not taxable to employees, including an employer’s contributions to a registered pension plan, a deferred profit-sharing plan or private medical, sickness or accident insurance. Reimbursement of some moving expenses for work-related relocation and tuition fees for work-related courses can also be non-taxable. However, many common employee benefits are taxable as though the employee received an equivalent amount of income.
Usually, if you pay club dues or membership fees for your employees or reimburse them for these fees, the amount is considered a taxable benefit to the employees. However, your employees won’t have a taxable benefit if you provide an in-house fitness facility that is available to all employees, either free or for a minimum charge. Alternatively, you may make arrangements to pay a fee to a recreational facility outside your company for a membership that belongs to your company rather than your employees. As long as the facility is available to all employees, whether they choose to use it or not, it is not considered a taxable benefit.
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