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CRA Announces Policy Changes for Employee Benefits (AMENDED Dec 17, 2009)

Subject: Employee Benefits Number: 09-22 Date: 10/23/2009

The Canada Revenue Agency (CRA) has announced policy changes for taxable employment benefits for 2009

The Canada Revenue Agency (CRA) has announced policy changes for taxable employment benefits for 2009. These changes impact employers for income tax purposes and may also impact the GST/HST input tax credits (ITCs) that employers can claim.

Effective for 2009, the CRA will consider no taxable benefit to arise for overtime meals and allowances if:

• the value of a meal or meal allowance is reasonable (a value of up to $17 per meal will generally be considered reasonable);
• the employee works two or more hours of overtime right before or right after his or her scheduled hours of work; and
• the overtime is infrequent and occasional in nature (less than three times a week). This condition may also be met where the meal or allowance is provided three or more times per week on an occasional basis to meet workload demands such as major repairs or periodic financial reporting.

Also effective for 2009, the following employment benefits will generally not be required to be included in an employee’s income:

• Loyalty points (i.e. frequent flyer points) collected on an employee's personal credit card when traveling on employer reimbursed business trips or incurring other business related expenses (subject to certain conditions)
• Allowances paid for travel within the municipality or metropolitan area that is primarily for the benefit of the employer

Starting in 2009, the rate at which the employment benefit is calculated for mileage reimbursed between home and work will be reduced from the general rate¹ to the operating benefit rate of $0.24 cents per kilometre where:

• the motor vehicle is specifically designed or suited for the employer's business or trade, and is essential for the performance of the employee's duties;
• the motor vehicle is not defined as an automobile pursuant to the Income Tax Act;
• the vehicle has not been used for personal use other than commuting between home and work; and
• there are genuine business reasons for requiring the employee to take the motor vehicle home at night.

¹Currently, the employment benefit is generally calculated at $0.52 cents per kilometre for the first 5,000 kilometres driven and $0.46 cents for each additional kilometre.