Canadian Payroll Reporter

Payroll Reporter R adian a www.payroll-reporter.com April 2015 April 2015 Putting a value on employee benefi ts Putting a value on employee benefi ts If payroll fails to properly value a taxable benefi t, it could mean big problems If payroll fails to properly value a taxable benefi t, it could mean big problems BY SHEILA BRAWN WHEN IT COMES to calculat- ing taxable benefits, one of the most important issues payroll practitioners face is putting a value on the benefit. Mistakes can be costly. "If the Canada Revenue Agen- cy (CRA) reviews the amount that the employer has ascribed to a benefit in the T4 slip and determines that the amount is either too high or too low, it will not hesitate to challenge the em- ployer's decision. This will re- sult in a tax assessment against the employer, the employees or both," says Adrienne Woodyard, a partner in the tax law group at the firm Davis in Toronto. The CRA (and Revenu Qué- bec) requires employers to as- sess taxable benefits based on fair market value minus any amounts the employee paid for them. The CRA defines "fair market value" as "the highest price that can be obtained in an open mar- ket between two parties dealing at arm's length." Payroll must value taxable benefits on this amount and not on how much it cost the employer to provide the benefit, says Woodyard. "The employer may, for ex- ample, obtain a bunch of gift cards at a discount from one of its customers and distribute those gift cards to the employ- ees. Even though the employer's cost of the gift card was reduced, the amount to be included in the employee's income for tax purposes is the face value on the card," she says. "Even though it seems unfair that the employees will have as- cribed to them a benefit that is greater than what it actually cost the employer, that won't make any difference. The employee British Columbia Government announces minimum wage changes The provincial government will raise minimum wage rates this September and begin indexing the rates to the province's consum- er price index (CPI) one year later, Minister of Jobs, Tourism and Skills Training and Minister Responsible for Labour Shirley Bond recently announced. On Sept. 15, the general minimum wage will rise from $10.25 an hour to $10.45 and the rate for employees who serve liquor on see LEGISLATIVE ROUNDUP on page 7 PM #40065782 Legislative Roundup Changes in payroll laws and regulations from across Canada News in Brief pg. 4 Unemployment rate | Payroll-related tax changes from provincial, territorial budgets | Payroll salary survey | Job quality hits record low |Vacation popular benefi t: Survey Ask an expert pg. 5 Issuing an ROE for a self-funded leave |Calculating statutory holiday pay when wages vary Driving home Driving home the need to understand the need to understand automobile benefi ts automobile benefi ts BY SHEILA BRAWN PAYROLL CAN BE a chal- lenging job with dozens of laws to obey and rules to follow. One area that can present difficulties is taxable benefits. "One of the most common compliance issues identified by the Canada Revenue Agency (CRA) and Revenu Québec in organizational audits is im- proper assessment of taxable benefits and allowances, or ex- cluding taxable benefits from employment income," the Ca- nadian Payroll Association said in a recent news release. "In fact, on the most recent list of top 10 CRA audit adjust- ments, seven out of 10 of the most commonly requested ad- see MANY on page 6 Credit: Andrey Popov/Shutterstock Family maintenance enforcement programs pg. 3 Compliance involves calculations, remittances and communications see COURT on page 2

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