Principal Issues: [TaxInterpretations translation] What is the employer's obligation when the employer has entered a taxable benefit amount for the use of an employer's automobile on a T4 slip when it should not have been entered?
Position: The employer may file amended T4 slips for affected employees for the previous 10 calendar years.
Reasons: Legislative analysis.
April 28, 2011
XXXXXXXXXX Headquarters Income Tax Rulings Directorate Isabelle Landry, M.Fisc. Attention:XXXXXXXXXX 2011-039430
Automobiles made available to employees
This is in response to your January 27, 2011 email in which you asked what an employer's obligation is where the employer has entered an amount of taxable benefit in respect of the use of an employer's automobile ("Automobile Benefit") on a T4 Statement of Remuneration Paid (the "T4 slip") for a particular taxation year but it should not have been entered.
Unless otherwise indicated, all statutory references herein are to the provisions of the Income Tax Act (the “Act").
Our Comments
The employer must indicate on T4 slips any remuneration paid to employees during a taxation year as well as the value of other taxable benefits including an Automobile Benefit. Where an employer has entered an Automobile Benefit amount on T4 slips for a particular taxation year that should not have been entered, the employer must normally prepare amended T4 slips to correct the situation. The employer must also include a note at the bottom of the amended T4 slips to indicate that the amount of the Automobile Benefit has been reduced. A copy of the amended T4 slips for a given taxation year must be sent to the Canada Revenue Agency ("CRA") and all affected employees informing them that they may request an adjustment to their income tax return for the particular taxation year.
By virtue of subsection 152(4.2), the Minister may, in certain circumstances and at the request of a taxpayer, reassess after the end of the normal reassessment period applicable to the taxpayer for a particular taxation year, and for the previous 10 calendar years. That subsection covers, in particular, situations in which an employee, who has received T4 slips that have been amended for previous taxation years, requests the CRA to correct the income tax return already filed for those taxation years. In your situation, the employer could therefore prepare amended T4 slips for the previous 10 calendar years.
Where an employee wishes to obtain an adjustment to an income tax return already filed for a taxation year that falls within the normal reassessment period, the employee should request the CRA to correct the employee’s income tax return by filing a duly completed Form T1-ADJ, T1 Adjustment Request, or a signed letter that provides all the information regarding the employee’s request, to the employee’s Tax Centre. If the relief the employee wishes to claim is for a particular taxation year that is beyond the normal reassessment period, the employee will instead be required to file Form RC4288, Request for Taxpayer Relief, duly completed at the end of the normal reassessment period to the employee’s Tax Centre.
We hope these comments will be of assistance. If you would like additional information regarding the content of this document, do not hesitate to contact us.
Guy Goulet CA M. Fisc.
Manager
for the Director
Ontario Corporate Income Tax Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch.