The CRA generally treats most employer-provided benefits as taxable unless a specific exemption applies. Common tax-free employer-provided items include certain work-related allowances, reimbursements for eligible business expenses, and some non-cash benefits that the CRA specifically excludes.
Common tax-free items
Reimbursements of legitimate employment expenses. If your employer repays you for eligible work expenses you had to pay under your job contract, that reimbursement is generally not taxable.
Certain non-cash benefits that the CRA excludes by rule. The CRA says benefits are generally taxable unless specifically excluded in the Income Tax Act or under CRA administrative policy.
Some allowances tied to specific employment conditions. The CRA notes that some allowances and benefits may not be taxable depending on the exact circumstances and the specific benefit category.
Benefits that are the only form of pay in some cases. The CRA says if a non-cash or near-cash taxable benefit is the only remuneration, there may be no amount to withhold tax from, even though the benefit can still be taxable.
Important distinction
A benefit can be taxable but not deducted at source, and that does not make it tax-free. For example, tips are generally employment income, and the CRA says they may need to be reported depending on how they are controlled and paid.
