Salary defferal plans and ROEs, standby charges for taxable benefits
Question: We provide some employees with company automobiles. When calculating the standby charge for their automobile taxable benefit, can we exclude periods that they are away on vacation if they leave the car and the car keys at their home while they are away?
Answer: No, you have to include the time the employees are away on vacation. It is the CRA’s position that the time must be included since the vehicle is still available to the employee because the keys are in the employee’s house, not at the employer’s place of business. The CRA’s view is that an automobile is available to an employee if the employee has access to or control over the automobile. Access ends only when the employee gives all of the automobile keys to the employer. If an employee leaves the keys with the employer while away on vacation and this is clearly documented, the CRA would allow the employer to exclude the vacation period when calculating the standby charge.
Question: When an employee takes a leave of absence under a salary deferral plan, does the employer have to issue an ROE for the period of leave?
Answer: Generally, an employer would not have to issue an ROE for such a leave (often called a self-funded leave) because there is no interruption of earnings. An employee on a have under a salary deferral plan has already worked and earned the pay, but has deferred a portion of it to fund the leave of absence. An employer would have to issue an ROE if either the employee or the employer ends the agreement that allowed for the self-funded leave of absence. In such a case, the employer would enter in Block 11 (last day for which paid), the date of the last day the employee worked before starting the leave.
Annie Chong is the manager of the payroll consulting group at Carswell, a Thomson Reuters business, which publishes the Canadian Payroll Manual and operates the Carswell Payroll Hotline. She can be reached at [email protected] or (416) 298-5085
