Acco340Lecture 2-3 - Employment Income

For travelling costs any employee not including a

Info icon This preview shows pages 9–11. Sign up to view the full content.

* for travelling costs any employee not including a motor vehicle ITA 6(1)(b)(vii.1) -   reasonable allowances * for use of a  motor vehicle *Normally,  an allowance is   reasonable  (and hence not taxable) if it reimburses an employee for expenses incurred on behalf the  employer. However,  if the allowance is in excess of actually incurred costs, then it is not reasonable   and hence taxable . If the allowance is less than the expenses incurred by the employee on behalf of the employer, then it is also not taxable, but it is  detrimental to the employee Therefore, reasonableness of an allowance can be determined if compared to actual costs incurred  meant to be reimbursed. - Motor vehicle allowances  under   ITA 6(1)(b)(vii.1)   can be       excluded      from employment income   if: i) The allowance is based  solely on number of kilometres driven for employment purposes    For 2010  for locations other than Yukon, NWT & Nunavut, the  prescribed rates  are:                                                        - 52¢ km for the first 5,000 kilometre                       - 46¢ km for subsequent kilometres,;  and  ii) No additional reimbursement is paid, except for specifics (eg. supplementary insurance, parking, tolls, etc).                                                                                                                                      a) Taxable Allowance     Any allowances not based on km driven  are not considered to be reasonable and hence taxable  Any km allowances above prescribed rates  are not considered to be reasonable and hence taxable 
Image of page 9

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

If an allowance is taxable to the employee, then ITA 8 allows the employee expense deductions (based on  the same restrictions as for employers, (eg,  for 2010 , max of $800 mth lease/ $30,000 owned vehicle) related  to earning the employment income and was related to the allowance (eg. gas, repairs, CCA, etc).                                  Note:  Deductions could be  more than ,     less than   or   equal to the allowance  that was paid. b) Non-Taxable Allowances     Allowances based on kilometres driven for business purposes are not taxable in the hands of the employee .   Note:   Car allowances, based on km driven, are deductible by the employer if paid within the prescribed rates for km  reimbursed. The excess paid above the prescribed rate, are not deductible.
Image of page 10
Image of page 11
This is the end of the preview. Sign up to access the rest of the document.
  • Fall '10
  • Mastromonaco
  • Quebec, taxable benefit, ITA, employee taxable benefit

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern