Keeping taxes out of a flexible benefits plan

A look at the tax implications of offering employees flexible benefits
By Christopher Newton
|Canadian HR Reporter|Last Updated: 10/02/2003


roperly designed, a flexible benefits plan offers the dual advantage of delivering employee benefits with maximum flexibility and tax effectiveness. However, if the plan design runs afoul of the Income Tax Act, employees and employers may suffer adverse tax consequences.

Granting flex credits to employees will not confer a taxable benefit, provided certain criteria are met. When an employee uses flex credits to select options under the plan, she may receive a taxable benefit, depending on the option chosen.