Taxing core benefits

The devil is in the details when it comes to proper administration
By Christopher Newtown
|Canadian HR Reporter|Last Updated: 05/05/2003

T

he taxation of benefits seems pretty simple at first glance — then again, so do many areas of tax. As HR professionals know, however, the devil is in the details. Unfortunately, good benefit plan design, proper payroll administration and effective employee communication depend on these details.

HR and payroll need to understand when employer contributions towards a benefit are taxable, as well as whether the benefit received from a plan is taxable. For example, the premiums paid by an employer to fund life insurance are taxable to an employee, whereas the benefit paid on death is not.