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Quiz: Taxable benefits and allowances

7 questions

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1 An employer provides a taxable non-cash benefit. No cash changes hands. What must it withhold? Only the employer's own CPP and EI shares Nothing until year end, when it is reported on the T4 Nothing — there is no cash payment to withhold from Source deductions on the value of the benefit, even though no cash is paid in respect of it

Answer key unconfirmed — rests on 2 unverified claims.

2 What distinguishes a taxable allowance from a non-taxable reimbursement? The distinction is the amount, with smaller payments treated as reimbursements Allowances are always taxable and reimbursements always are not, without exception An allowance is paid without any requirement to account for actual amounts spent and is generally taxable; a reimbursement of a substantiated business expense actually incurred is generally not employment income The distinction is whether the payment is made in advance or in arrears

Answer key unconfirmed — rests on 3 unverified claims.

3 An employee's non-cash taxable benefit is pensionable. Is it also insurable? Only where the employee also receives cash remuneration in the same period Yes — taxable and pensionable amounts are always insurable Only where the benefit exceeds a threshold Generally not — non-cash taxable benefits are generally not insurable for EI, even where taxable and pensionable

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4 Where would you look to determine whether a specific benefit is taxable, pensionable and insurable, and which T4 box it goes in? The payroll deductions tables The TD1 instructions CRA's benefits and allowances chart The T4 Summary

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5 Which of these figures used in valuing benefits are reset periodically? Select all that apply.

Select all that apply.

The per-kilometre rates used in calculating an automobile operating expense benefit, set annually The prescribed interest rate used for an employee loan benefit, set quarterly Whether an employee loan below the prescribed rate gives rise to a benefit at all The method for calculating the personal-use automobile benefit

Answer key unconfirmed — rests on 4 unverified claims.

6 How are taxable benefits reported on the T4? Only in total employment income, with no separate identification Only in a separate box identifying the benefit Included in total employment income and also reported in a separate box identifying the benefit On a T4A rather than the T4

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7 An employer wants to give staff holiday gifts without creating taxable benefits. Gifts are never taxable benefits Only cash gifts are taxable benefits, and non-cash gifts never are CRA's administrative policy on gifts and awards sets conditions and thresholds under which certain gifts and awards are not treated as taxable benefits Any gift is a taxable benefit; there is no exception

Answer key unconfirmed — rests on 1 unverified claim.

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