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ANSWER: The CRA defines scramble parking as parking where there are "significantly fewer parking spaces" than there are employees who want to park. Employees are not guaranteed to find a spot in the parking lot on any given day. For example, if an employer has 100 employees who want parking, but only provides parking for 60 of them, this would qualify as scramble parking.

The CRA considers scramble parking to be an employee benefit, but it does not require employers that provide it to include the value of the benefit in an employee’s income because it is difficult to accurately value it.

Employers need to make sure they really do provide scramble parking before excluding the benefit from an employee’s income. The CRA provides examples of types of parking that it does not consider to be scramble parking:

• An employer provides enough parking spaces for all employees who want one every day, but the parking is "unassigned" (meaning employees are not given a particular parking spot).

• An employer has 50 parking spaces and 52 employees who want to park.

• An employer with 100 employees only has 75 parking spots. It gives all employees a parking pass, but 30 employees do not drive to work, leaving 75 spots for 70 employees who want one.

• An employer has 400 parking spots and 600 employees who want parking; however, the employer operates with three equal shifts over a 24-hour period, meaning that not all employees will want to park at work at the same time.

• An employer hosts an annual company-wide meeting and a significant number of employees cannot find a parking spot on that day because shift workers and employees who work from home are taking part in the meeting, but on a regular workday, most employees are able to find a space to park.

If the parking does result in a taxable benefit, include the value of the benefit in the employee’s income for calculating Canada/Quebec Pension Plan (C/QPP) contributions and income tax deductions. If the benefit is paid in cash, deduct premiums for employment insurance (EI) and Quebec Parental Insurance Plan (QPIP) (if applicable). If it is a non-cash benefit, do not deduct EI or QPIP premiums.

For year-end reporting, report the taxable benefit on a T4 in box 14 and in the "Other Information" area, using code 40. For Revenu Québec, report the benefit in boxes A and L on an RL-1.

Keeping TD1s up to date

QUESTION: Are employees required to update their TD1, Personal Tax Credits Return, every year to ensure it is accurate?

ANSWER: There is no legislative requirement that specifies how often employees should update their TD1 form. The Canada Revenue Agency (CRA) says employees should update the form when there is a change to their federal and/or provincial/territorial tax credit amounts. This could happen if the government revises a tax credit or the individual’s personal circumstances affecting the tax credit change. If there is a change, the employee must complete a new TD1 no later than seven days after the change.

For employers with Quebec payrolls, Revenu Québec has similar rules for its TP-1015.3-V, Source Deductions Return. Once an employee has submitted a TP-1015.3-V to the employer, the individual does not have to file a new one unless there is a change to the amounts he is claiming on the form. If there is a change that leads to a reduction in the amounts the employee originally claimed on the form, Revenu Québec requires that the employee file an updated TP-1015.3-V within 15 days after the event that lead to the reduction.

Although the CRA and Revenu Québec do not require employers to make sure employees keep their TD1s and TP-1015.3-Vs up to date, it is a good business practice to remind employees to periodically review their forms on file to make sure the information claimed on them is still valid.

Bonus payments and death benefits

QUESTION: One of our employees recently died. We are paying out a bonus that the employee was awarded before he died. Do we take source deductions from the bonus payment or is it considered a death benefit?

ANSWER: No, it is not a death benefit. Death benefits are lump-sum payments paid at the discretion of the employer or, in some cases, made to recognize a deceased employee’s service. The payment of a bonus that an employer awarded to an employee before the employee died is considered regular employment income and is subject to normal deductions for C/QPP contributions and income tax. The payment is not subject to EI or QPIP premiums.

In Quebec, include the payment when calculating employer contributions to the Health Services Fund and the Commission des normes du travail and in determining an employer’s participation in the Quebec Workforce Skills Development and Recognition Fund.

The bonus payment can be made "To the Estate of the late..." and is reported in box 14 of the T4 and box A of the RL-1.