14 April 2020 APFF Roundtable Q. 5, 2020-0845431C6 F - Avantage imposable - télétravail / Taxable benefit
Principal Issues: Does an allowance paid by the employer to an employee for the purpose of acquiring equipment for teleworking is a taxable benefit for the employee?
2- Would CRA response be different if the amount paid by the employer is conditional on a proof of purchase being submitted by the employee?
Position: 1- Yes.
2- It depends, question of fact.
Reasons: 1- Wording of the Act.
2- In the context of the COVID-19 crisis, CRA is willing to accept a reimbursement of an amount not exceeding $500 for the purchase of personal computer equipment to be principally for the benefit of the employer.
APFF WEBINAR OF 14 APRIL 2020 : TAX ASPECT OF MEASURES RELATED TO COVID-19 : EXCHANGE WITH ARC AND REVENU QUÉBEC REPRESENTATIVES
Question 5
Are payments by an employer to its employees, to enable them to equip themselves to telework, taxable to the employees? Is the answer different if the payment is conditional on an invoice being submitted by the employee?
CRA Response
An individual is, subject to certain exceptions, required to include in computing income from employment any allowances received by the individual that are not required to be accounted for. Thus, to the extent that, in this case, the employer's assistance was in the form of an allowance, the employee would, in all circumstances, be required to include the allowance in computing income from employment since there is no provision excepting such an allowance.
Furthermore, the employer may determine to reimburse an employee's expense upon presentation of an invoice. It will then be a taxable benefit if it is determined that the employee received an economic benefit, that the benefit is measurable or quantifiable, and that the benefit primarily benefits the employee rather than the employer. The question of whether a benefit primarily benefits the employee or the employer is a question of fact that can only be resolved after a full analysis of the facts of a particular situation.
In principle, an employee receives a taxable benefit when the employee’s employer reimburses a personal expense to acquire telework equipment.
However, the current particular context of declaring a health emergency in Canada due to COVID-19 has precipitated many employees who do not have the necessary computer equipment to telework.
In this particular context, the Canada Revenue Agency is prepared to accept that the reimbursement, upon presentation of supporting documentation, of an amount not exceeding $500, of all or part of the cost of acquiring personal computer equipment to enable the employee to immediately and properly perform the employee’s work, is primarily for the benefit of the employer, so that it does not result in a taxable benefit to the employee.