COVID-19: Employer-provided benefits and allowances'

Commuting costs

The CRA acknowledges that employees who are required to commute to their regular places of employment to perform employment duties may incur additional commuting costs to minimize their risk of exposure during the COVID-19 pandemic. Employees may also incur costs to commute to their regular place of employment to pick up equipment that enables them to perform employment duties from home. In recognition of these challenges, the CRA is applying the following tax treatment in these situations:

If an employee continues to perform their employment duties at their regular place of employment:

When an employer pays for, reimburses, or provides a reasonable allowance for additional commuting costs incurred by an employee during the COVID-19 pandemic, the CRA will not consider the amounts to be taxable, provided these costs are over and above the employee’s normal commuting costs.

This position is extended to the use of employer-provided motor vehicles for commuting if the employee did not normally commute to work using an employer-provided motor vehicle before the COVID-19 pandemic.

If an employee is performing their employment duties at home because their regular place of employment is closed:

When an employer pays for, reimburses, or provides a reasonable allowance for commuting costs incurred by an employee to travel to their regular place of employment for any purpose that enables them to perform their duties from home (for example, to retrieve necessary equipment or supplies), the CRA will not consider the amounts to be taxable.

This position is extended to the use of employer-provided motor vehicles for such travel.

In both situations, employers are expected to maintain appropriate records to demonstrate that any allowances provided are reasonable in relation to the commuting costs incurred by the employee. Employees are expected to maintain appropriate records to account for their use of employer-provided motor vehicles, including the total kilometres driven when commuting between home and their regular place of employment.

Employer-provided parking

When a regular place of employment is closed due to COVID-19, including situations where employees have been sent home by the employer, or have been given the option to work from home on a full-time basis due to the pandemic, employer-provided parking at the regular place of employment will not be considered a taxable benefit by the CRA.

However, once an employee returns to their regular place of employment to perform their duties, including situations where an employee regularly returns to their regular place of employment to perform employment duties on a part-time basis, the CRA will consider the employer-provided parking spot available for an employee’s use and the employer-provided parking would be a taxable benefit. For more information, go to Parking.

Computer and home office equipment

The CRA recognizes that the COVID-19 pandemic has resulted in many employees having to work from home, where they may not have the necessary computer or home office equipment (desk, office chair, etc.) to perform their employment duties. In this particular context, the CRA will not consider an employee to receive a taxable benefit where their employer pays for or reimburses up to $500 of computer or home office equipment to enable the employee to carry out their employment duties, provided the employee submits receipts to the employer.

It should be noted, however, that $500 is the maximum amount that can be reimbursed to each employee and is not for each piece of computer or office equipment that an employee may purchase between March 15, 2020 and December 31, 2022. If an employer pays for or reimburses more than $500 of computer or home office equipment, the amount over $500 must be included in the employee's income.

For example, if an employee purchases a computer for $400 in 2020 and an office chair for $250 in 2021 that they will keep after the pandemic, an employer can reimburse the employee up to $500 without the employee receiving a taxable benefit under the administrative position. By contrast, if the employer reimburses the employee the full amount for these purchases, the amount over $500 (that is, $150) must be included in the employee’s income in 2021.

This position is extended to accountable advances provided to an employee, but does not apply to allowances provided for this purpose. An accountable advance is an amount an employer gives to an employee who has to account for their expenses by producing receipts and returning any amount they did not spend. If an employer provides an employee with an allowance for computer or home office equipment, even if the allowance is $500 or less, the full amount of the allowance must be included in their employment income as a taxable benefit.

Meal costs

Where an employer pays for, reimburses, or provides a reasonable allowance for meals to employees working at their regular place of employment during regular hours of work, the amount must be included in their employment income as a taxable benefit. However, the CRA’s existing policies maintain that there are certain circumstances where an employer can provide an overtime meal or allowance, or a subsidized meal, without the employee receiving a taxable benefit. For more information, go to Overtime meals and allowances.

Cell phone and/or internet service plans

The CRA’s existing policies maintain that an employer may pay for or reimburse the cost of an employee's cell phone service plan, or Internet service at home to help carry out their employment duties. The portion used for employment purposes is not a taxable benefit. For more information, go to Cellular phone and Internet services.

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