A taxable benefit is a benefit that employers granted to their employees and that is subject to income tax. For example, employer and employee contributions paid into the construction industry insurance plan enable employees to receive insurance coverage. According to the different tax laws, the value of this taxable benefit resulting from employer contributions must be added to the salary when income tax to be deducted from the employee’s pay is calculated.
For the purpose of provincial income tax, life insurance contributions and health insurance contributions constitute taxable benefits. Revenu Québec (MRQ) requires that all employers take account of this taxable benefit when they calculate their deductions at source each time they pay salaries. The contribution amount varies by trade and by sector.
At tax time, the CCQ issues a Relevé 22 to employees, so that they can adjust the amount of the taxable benefit from which they actually benefited during the preceding year – that is, whether the deductions at source were too high or too low.
For the purpose of federal income tax, the Canada Revenue Agency (CRA) counts only the life insurance contribution as a taxable benefit. In addition, the CRA does not require employers to take account of the taxable benefit of life insurance contributions when they calculate their deductions at source.
At tax time, the CCQ issues all employees concerned a T4A tax statement indicating the value of this taxable benefit. If an employer also includes this taxable benefit on the T4 tax statement that it issues to its employees, these employees will be taxed twice on the same benefit.
Consulting the different rates
Because the rates for the different taxable benefits may be updated more than once a year. Notwithstanding the end date indicated, changes may be required before this period is over. If applicable, employers will be notified of the effective date of the new rates.
Consult them by selecting the desired sector and trade under the “Wages Rates” heading or use the available PDF tables: