November 2019 Newsletter

Employer-provided parking pass included in employee’s income

Generally, if an employer provides free parking for an employee at or near the place of employment, the value of the parking is considered a personal benefit and therefore included as a taxable benefit in computing the employee’s income. (An exception may apply if the parking is “scramble parking”, under which the parking lot has fewer parking spaces than the number of employees provided with the parking.)

In the recent Smith case, the taxpayer was a flight attendant who was given a free parking pass from his airline. The CRA assessed the taxpayer on a taxable benefit, and the assessment was upheld by the Tax Court of Canada. The taxpayer appealed the decision to the Federal Court of Appeal.

The Federal Court of Appeal agreed that the airline had good business reasons for providing the parking pass, but those reasons were irrelevant in determining whether the taxpayer received a personal benefit. Free parking was a valuable economic benefit that the taxpayer enjoyed regardless of the business decision of the airline, and also regardless of whether it was impractical for him to take public transit. The value of the parking pass was therefore included in his income.

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This letter summarizes recent tax developments and tax planning opportunities; however, we recommend that you consult with an expert before embarking on any of the suggestions contained in this letter, which are appropriate to your own specific requirements.

Last modified on November 14, 2019 12:00 am
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