Parking is a taxable benefit at FMV less what the employee pays

When is parking taxable, and when is it exempt?

Parking you provide or reimburse is generally a taxable benefit, including when the employee pays something but less than the fair market value of the space canada.ca. The legal hook is paragraph 6(1)(a), which brings into employment income the value of "benefits of any kind whatever" laws-lois.justice.gc.ca. The CRA's administrative policy then carves out the cases below, as of October 2026.

Commuting is never business use. The CRA says driving from home to the office doesn't count, and the T4130 guide says travel between work and home isn't travel for business purposes canada.ca. The business use test covers an employee who must use their own car, or one you usually supply, for off site meetings or service calls.

How do you value the benefit? A worked example

The value is the fair market value of the parking less any amount the employee pays for it canada.ca. Fair market value is generally what a similar space in the surrounding area would reasonably cost, and your own cost is usually not a factor. On a lot you own, use fair market value, not cost. On a lot you lease, what you pay can be the fair market value if it matches the rate charged to the public for a similar space. The CRA prescribes no method, so check public rates for similar spaces nearby under the same terms (daily or monthly), and revalue when the local market changes significantly.

Your client provides a downtown space worth $300 a month. The employee pays $50 a month through payroll and drives to client sites 2 days in a typical 5 day week, which is below the 3 day threshold, so the benefit is prorated rather than removed.

That follows the CRA's own example, where a $3,000 space used for business once a week loses 20% ($600) and then the employee's $1,200 of payments, leaving a $1,200 benefit canada.ca. Include the benefit in the pay period the employee received or enjoyed it, not as one lump in December.

How many spaces still count as scramble parking?

Scramble parking is exempt only when there are not more than 2 spaces for every 3 employees who want parking, the spaces are unassigned, and they're offered to everyone who wants one canada.ca. Count the employees who want parking, not total headcount, and redo the count at least once a year, or sooner if the ratio changes significantly.

At 100 employees, two thirds is 66.67, so 67 spaces is more than 2 for every 3 and the exemption is gone for everyone. Assigning spaces breaks it too, because the spaces must be unassigned. So does having enough: the T4130 guide says that if you provide enough spaces for every employee who wants one, even without assigning them, it isn't scramble parking and the benefit goes on payroll canada.ca. Older firm articles still quote a looser "significantly fewer spaces" test. The current CRA wording is the 2 for 3 ratio.

How do you withhold and report the parking benefit?

It depends on whether the benefit is cash or in kind. A space in your lot is the actual service you give the employee, and a payment you make to a third party counts as in kind when you're responsible for the expense canada.ca. The CRA's withholding and T4 rules for parking are below canada.ca.

The benefits chart gives the same answer: parking is taxable, code 40 on the T4 (code 028 on a T4A), with EI and GST/HST depending on cash or in kind canada.ca. Code 40 is already inside box 14, so the employee doesn't add it again; see the T4 box 14 page.

On GST/HST, ETA section 173 deems a registrant employer to have collected tax on a taxable benefit it reports under paragraph 6(1)(a), on the last day of February of the following year, unless an exception applies, such as the employer having no input tax credit on the parking because of section 170 laws-lois.justice.gc.ca.

Which edge cases change the parking answer?

Disability: parking near the work location is not taxable for an employee who is blind, or who has a severe and prolonged mobility impairment and qualifies for the disability tax credit canada.ca. The exclusion is in paragraph 6(16)(a) of the Act laws-lois.justice.gc.ca. Coworkers in the same lot can still have a taxable benefit. The credit itself is covered on the disability tax credit page.

Company cars: parking is not an operating expense for the automobile operating expense benefit, so don't fold it into that number canada.ca. Assess it under the parking rules, and see the operating cost benefit page for what does count.

Hybrid schedules: a monthly space is valued at the monthly rate, because the CRA says fair market value already reflects that an employee doesn't work 30 days a month and the employee keeps the right to park every day canada.ca. Fewer office days alone don't shrink the benefit.

COVID 19: the closure exception ended on December 31, 2022, and it stopped earlier for anyone who went back to the regular workplace, even part time canada.ca. A client still relying on it for 2026 has an unreported benefit.