What counts as a benefit
The CRA treats a benefit as a good or service of a personal nature that you give an employee, or pay a third party to give, including to a family member who does not deal with the employee at arm’s length. Free use of property you own is a typical case. An allowance paid without receipts, or a reimbursement of a personal expense, can also be a benefit.
Generally, benefits are taxable under the Income Tax Act unless a rule specifically excludes them. The CRA’s administrative policies set out conditions under which some benefits are not taxable, so each type of benefit needs its own check rather than one blanket answer.
Cash, near-cash and non-cash
Cash includes currency, cheques and direct deposits. Near-cash is something that works like cash or converts to it easily, such as a security. A non-cash, or in-kind, benefit is the actual good, service or property, including an amount you pay a third party for it. Under the CRA’s policy on gifts and awards, a gift card that meets every condition may be treated as non-cash.
The category matters because it affects payroll deductions. For many benefits, the CRA’s chart shows that CPP is withheld on the value, while EI premiums apply to cash but not to non-cash benefits. Confirm the treatment for the specific benefit before setting up the payroll run.
Value and reporting
The value of a benefit is generally its fair market value, meaning the price in an open market between two parties dealing at arm’s length. GST/HST may need to be included in the value for income tax purposes, depending on the type of benefit. You report the taxable amount in box 14 of the employee’s slip and also in the Other information area, using the code that matches the benefit.
Illustrative example: an employer pays $1,200 for a tuition course that mainly benefits the employee rather than the business. Because the employee receives a measurable economic advantage, the $1,200 may need to be added to employment income. If the training is required for the job and mainly benefits the employer, the answer can differ.
What to discuss with your accountant
Common mistakes are treating a perk as a business expense without checking the employee side, forgetting that shareholder-employees can receive benefits too, and recording a benefit in the books but not on payroll. Keep invoices, the basis for the valuation and any employee acknowledgement.
Before you offer a new perk such as a phone plan, a vehicle or a staff event, ask whether it is taxable, how it is valued and which payroll code applies. Raising it before the first pay run is usually simpler than correcting slips afterward.
Sources & editorial notes
Sources checked October 24, 2026. The examples are illustrative and provide general information. Discuss how the guidance applies to your circumstances with your accountant.
- When to remit payroll deductions and contributionsCanada Revenue Agency
- What is a taxable benefitCanada Revenue Agency
- Determine if a benefit is taxableCanada Revenue Agency
Rules and guidance can change. Use the current official source and confirm the treatment for your facts. To flag an error, contact Sora.