Taxable benefit and year-end reporting
Question: Our company generally calculates employees' taxable benefits at the end of the year when we prepare our T4s. Are we in violation with the guidelines of Canada Revenue Agency (CRA) and/or Ministere Revenu du Quebec (MRQ)?
02/16/2006|hrreporter.com|Last Updated: 03/20/2006
Answer: You are required to include the dollar value of the taxable benefit with the employee's pay in the pay period in which the employee receives and enjoys the benefit. Waiting until the end of the year to calculate taxable benefits could result in CRA and MRQ imposing penalties on the employer for failing to withhold and remit the appropriate amount of source deductions on time.
If you do not know the exact value of the taxable benefit you can use an estimate. This is a common practice for automobile taxable benefits.