Disability-related employment benefits
Disability-related employment benefits
Content has been updated for clarity, completeness, and plain language.
No changes were made to the current Canada Revenue Agency (CRA) administrative policy.
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Determine if the benefit is taxable
Situation: Benefits or allowances you provide to your employee for transportation costs
If you provide a benefit or an allowance for transportation costs to an employee who has a severe and prolonged mobility impairment (eligible for the disability tax credit (DTC)) or is blind, the benefit or allowance is not taxable when it is for reasonable transportation costs between an employee's home and work location (including parking near that location).
These transportation costs can include an allowance for taxis or specially designed public transit and parking that you provide or subsidize for these employees.
Individuals eligible for the DTC
Individuals eligible for the DTC include individuals that have a severe and prolonged impairment in:
- vision
- walking
- mental functions necessary for everyday life
- hearing
Examples
- An employee has a severe and prolonged mobility impairment and their DTC claim was approved. The employer provides parking for all of its employees near the work location. While other employees may have a taxable benefit, the parking space required by this employee is not a taxable benefit.
- An employee is considered blind. The employer subsidizes their expense for taking a taxi between their home and workplace. The value of the subsidized taxi is not a taxable benefit.
- An employee is hearing-impaired and their DTC claim was approved. During the monthly staff meeting, their employer pays for an attendant to take notes or for sign language interpretation for them so that they do not miss any of the points being raised. The cost of the attendant is not a taxable benefit to the employee.
Proof of eligibility for the DTC
The amount entered on line 6, disability amount of Form TD1, Personal Tax Credits Return is considered proof from the employee for the DTC eligibility. You may recommend to your employee to complete a new TD1 Form if their situation has changed. When CRA makes a decision for the DTC eligibility, a notice of determination or proof of eligibility is sent to the taxpayer. You can ask your employee for a copy of the DTC approval as proof but your employee is not required to provide it.
Learn more: Disability tax credit (DTC)
Situation: Benefits or allowances you provide to your employee for attendant services
If you provide a benefit or allowance for attendant services to an employee with a severe and prolonged mental or physical impairment, the benefit or allowance is not taxable when it is for reasonable costs for attendants to help these employees perform their duties of employment.
Attendant's services costs can include readers for persons who are blind, signers for persons who are deaf, and coaches for persons who are intellectually impaired.
Calculate the value of the benefit
If the benefit is taxable, the value of the benefit is equal to the fair market value (FMV) of the benefit provided.
Withhold payroll deductions and remit GST/HST
The withholding and remitting requirement depends on the type of remuneration: cash , non-cash , or near-cash .
You must withhold the following deductions:
Non-cash and near-cash: Option 1
Withhold:
- Income tax
- CPP
- EI (do not withhold)
Remit:
- GST/HST in certain situations
Cash: Option 2
Withhold:
- Income tax
- CPP
- EI
Do not remit:
- GST/HST
The amounts must be included in the pay period they were received or enjoyed.
Learn how to calculate deductions and the GST/HST to remit on benefits: How to calculate – Calculate payroll deductions and contributions.
Report the benefit on a slip
You must report the following amounts on the T4 slip:
Non-cash and near-cash: Option 1
Report on:
- Box 14 – Employment Income
- Box 26 – CPP/QPP pensionable earnings
- Code 40 – Other Information
Cash: Option 2
Report on:
- Box 14 – Employment Income
- Box 24 – EI insurable earnings
- Box 26 – CPP/QPP pensionable earnings
- Code 40 – Other Information
Learn how to report the benefit on a slip: Fill out the slips and summaries – File information returns (slips and summaries).
References
Related
- Who is eligible – Disability tax credit (DTC)
- Vision eligibility – Disability tax credit (DTC)
- Income Tax Folio S1-F1-C1, Medical Expense Tax Credit
- Income Tax Folio S1-F1-C2, Disability Tax Credit
- Income Tax Folio S1-F1-C3, Disability Supports Deduction
- Guide RC4064, Disability-Related Information
- About the GST/HST on benefits
- GST/HST memorandum: Taxable Benefits (Other than Automobile Benefits)
Legislation
- ITA: 6
- Amounts to be included as income from office or employment
- ITA: 6(1)(a)
- Value of any benefit is to be included as income from office or employment
- ITA: 6(1)(b)
- Allowance for any purpose
- ITA: 6(16)
- Disability-related employment benefits – reasonable amounts not included in income
- ITA: 118.2(2)(a)
- Eligible medical expenses
- ITA: 118.3
- Credit for mental or physical impairment
- ITA: 118.3(1)(c)
- Credit for mental or physical impairment
- CPP: 12(1)
- Amount of contributory salary and wages
- ETA: 173
- Taxable benefit is considered a supply for GST/HST purposes
- IECPR: 2(1)
- Amount of insurable earnings
- IECPR: 2(3)
- Earnings from insurable employment
- IECPR: 2(3)(a.1)
- Earnings from insurable employment – amount excluded as income under 6(1)(a) or (b), 6(6) or (16) of the ITA
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