"Without the logbooks,the CRA will generally assume that the employee’s personal use was 2,004 kilometres a year"
Logbooks for employer-provided automobiles
Question: We provide automobiles for work to a number of our employees. I have just discovered that some of them have not kept complete logbooks of their business and personal driving. Do I need complete logbooks to calculate their taxable benefit or can I base it on partial information?
Answer: It is essential employees keep complete, accurate and up-to-date logbooks on their driving when they have an employer-provided automobile. The logbooks must contain information on the total number of kilometers the employee (or a person related to the employee) drove for business and for personal use in the calendar year.
It could also include information such as the date, name and address of the business client visited and the distance the employee drove between home and the client`s location, as well as amounts the employee reimbursed the employer. Without the logbooks, the CRA will generally assume that the employee’s personal use was 20,004 kilometres a year or 1,667 kilometres per month.
It is important that employers not wait until the end of the year to check employees’ logbooks. It is better to look at them periodically throughout the year to ensure that the employees are keeping adequate records.
Top-up payments
Question: We pay top-up payments to employees who are off work on maternity, parental or compassionate care leave and are receiving EI benefits. Are these top-ups reported on a T4 or a T4A?
Answer: The answer depends on whether your top-up payments are paid under a Supplementary Unemployment Benefit (SUB) Plan that qualifies as a SUB plan under the federal Income Tax Act. Qualified plans must meet certain criteria and be registered with the Canada Revenue Agency. If the plan is a qualified SUB Plan, you must report the top-up payments in the Other Information area on the T4A, using code 152. For Quebec, report them in the code box (case O) on an RL-1 using code RA.
If the plan does not qualify as a SUB plan under the Income Tax Act, you must report top-up payments in box (14) on the T4. For Quebec, report the payments in box (A) on the RL-1.
Annie Chong is manager of the payroll consulting group at Carswell, a Thomson Reuters business, which publishes the Canadian Payroll Manual and operates the Carswell Payroll Hotline.
