A taxable benefit is a benefit that employers granted to their employees and that is subject to income tax. For example, contributions to the construction industry’s insurance plan paid by employers enable employees to benefit from insurance coverage. Under the different tax laws, the value of this benefit must be added to the salary for the purpose of calculating the tax to be deducted from the employee’s pay.
For the purpose of provincial income tax, life insurance contributions and health insurance contributions constitute taxable benefits. Revenu Québec (MRQ) requires that all employers take account of this taxable benefit when they calculate their deductions at source each time they pay salaries. The contribution amount varies by trade and by sector.
At tax time, the CCQ issues a Relevé 22 to employees, so that they can adjust the amount of the taxable benefit from which they actually benefited during the preceding year – that is, whether the deductions at source were too high or too low.
For the purpose of federal income tax, the Canada Revenue Agency (CRA) counts only the life insurance contribution as a taxable benefit. In addition, the CRA does not require employers to take account of the taxable benefit of life insurance contributions when they calculate their deductions at source.
At tax time, the CCQ issues all employees concerned a T4A tax statement indicating the value of this taxable benefit. If an employer also includes this taxable benefit on the T4 tax statement that it issues to its employees, these employees will be taxed twice on the same benefit.
Consulting the different rates
The different rates for taxable benefits are updated twice a year and may be consulted by selecting the specific sector and trade under the “Wages” heading, or by consulting the available PDF tables :