Taxable benefits CRA: almost all are income, EI only on cash ones

Which benefits are taxable, and what do you withhold on each?

Generally, every benefit you give an employee is taxable under section 6 of the Income Tax Act unless the Act specifically excludes it, and CRA administrative policy carves out a few more canada.ca. Section 6(1)(a) reaches benefits "of any kind whatever", including ones given to a person who doesn't deal at arm's length with the employee, like a spouse or child laws-lois.justice.gc.ca.

The CRA chart below covers the benefit once it's taxable. It says to withhold CPP on all of them, so the table shows EI, the T4 code and whether GST/HST goes into the value canada.ca.

The car rows have their own math: see the standby charge and the operating cost benefit. Gifts, cell phones and parking each have a page too: gifts and awards, cell phones and parking. Meal allowances and northern travel benefits are on CRA meal allowance rates and the northern residents deduction.

Which benefits does the CRA leave tax free?

Whether a benefit is taxable turns on two questions: does the employee get an economic advantage measurable in money, and are they its primary beneficiary canada.ca. These are the exclusions you'll use most, each with its conditions.

Sources for the rows: savings and pension plans canada.ca, insurance premiums and PHSPs canada.ca, child care canada.ca, recreation and clubs canada.ca, discounts canada.ca, dues canada.ca and gifts canada.ca.

The in house policies for child care and recreation break the same way: offer it to a select group free while others pay full price, and it becomes taxable to that group canada.ca. Discounts on services get no policy relief at all, so they are always taxable canada.ca.

Cash or non cash decides EI

The CRA sorts benefits three ways. Cash is currency, cheques and direct deposit. Near cash works like cash or converts to it easily, such as a security. Non cash is the actual good or service, including a third party payment you're responsible for canada.ca.

Group RRSPs are the trap. Your contributions are cash, so EI applies, unless the employee can't withdraw them before retiring or leaving; then they're non cash and only CPP applies. Skip income tax on an RRSP or FHSA contribution when you have reasonable grounds to believe the employee can deduct it, such as a copy of their RRSP deduction limit statement canada.ca.

Two more rules from the chart. Don't deduct CPP when a non cash benefit (other than security options) is the only pay the employee gets that period. And for board, lodging and housing, withhold EI on the non cash value when you also paid cash earnings in that pay period canada.ca.

Gift cards sit on the line: one that meets every CRA condition counts as non cash and can go into the $500 limit, and one that doesn't is near cash and fully taxable canada.ca.

Worked example: one employee to the T4

Your client pays Priya a $60,000 salary. It also puts $1,000 into her group RRSP, which she can withdraw at any time, gives her $650 of non cash gifts, and pays $1,800 of premiums for a qualifying health and dental PHSP.

Code 40 shows $1,150: the $1,000 RRSP plus the $150 of gifts. The CRA's own gift example works the same way: $650 of gifts leaves a $150 benefit canada.ca. The RRSP goes into boxes 14, 24 and 26 because it's a cash benefit; had it been locked in until retirement, box 24 would drop by $1,000 canada.ca. Both totals sit under the 2026 maximums on the EI page and the CPP page.

For how box 14 ties to boxes 24 and 26 in general, see T4 box 14.

Edge cases accountants hit

Owner managers. Section 15(1) taxes a benefit a corporation confers on a shareholder laws-lois.justice.gc.ca. A benefit your client gets as an employee falls under section 6 and goes on the T4; one received as a shareholder belongs under 15(1). See the shareholder benefit page.

Former and retired employees. Premiums you pay for them move to the T4A: group term life insurance goes in code 119 (with no $500 filing threshold), and provincial hospital or medical plan premiums go in code 118 canada.ca. Group term life is taxed under its own rule, section 6(4) laws-lois.justice.gc.ca.

Value and reimbursements. A benefit is generally valued at fair market value, and GST/HST may need to go into that value canada.ca. Anything the employee pays you back comes off it, and you include the amount in the pay period it was received or enjoyed canada.ca.

Dues you treat as tax free. Tell the employee they can't also deduct those dues from their employment income canada.ca.