Let’s talk about taxable employee benefits. Surely you have heard about this topic, since, in Canadian territory it has become quite popular in recent years. But what is a taxable benefit? We answer below and, believe us, if you are an employer, it will be of interest to know more about it.
Offering good benefits in the workplace is the duty of every good employer. So, a good incentive for workers never hurts. Offering benefit products (such as health or insurance programs) are excellent options. However, these can be enhanced with the addition of taxable benefits.
Want to get the right information on this? From Lewer, where we are experts in employee benefit programs in Canada of various types, we will explain it all to you simply and briefly. Read on to find out more!
What are taxable benefits in Canada?
The answer to this question is quite simple. Let us clarify that, although the title of the section indicates taxable profits in Canada, this easily applies to any country (since in principle, they follow the same rule). Now, let’s answer the big question: what is a taxable profit?
By taxable benefit we mean a financial compensation or extra services that are provided to workers. These services are provided 100% by the company. Generally, this is added to the employee’s income and then taxed in exchange for the benefit obtained.
To make it clearer, by way of example, we show you a list of taxable benefits Canada (at least, the most common ones):
1. Insurance
It can be insurance of any kind: life, medical, group. And the principle is the same for everything on this list: add to the income established in the workplace, provide the services and tax it in return.
2. Health
Another of the most common services is health care. Often, companies provide health programs for their employees, which include medical care, treatments, and so on. There are more specific cases, such as dental or children’s health.
3. Communication
If companies provide cell phones, computers or other related devices for work use, it may be necessary to include them as taxable communication benefits.
4. Transportation
In the case of transportation, the same occurs as in the case of communication. Whether collective or individual transportation service is provided (as vehicles to workers), in both ways they are considered taxable benefits.
5. Other expenses
Apart from those already listed, there are other services that can also be considered within the taxable benefits for employees. Among them we have: food, celebrations, lodging… In short, the list could be extended much longer.
The most common cases are these, but, in reality, each addition is at the discretion of the employers and/or the company. Whatever these entities consider necessary to help their employees may be considered as a taxable benefit.
Taxable profits: benefit or effect?
Having understood the above and the generalities of this topic (such as what are examples of taxable benefits), we can give way to other questions that are handled within the vox populi.
For example, many people ask questions such as whether taxable benefits are good or bad or whether taxable benefits affect the total payment. The short answers may be that they are ultimately good and that they don’t affect total employee pay. But, we can dig a little deeper on this.
Taxable benefits can be considered a good addition with the understanding that you are helping employees. That is, providing help of these types can be a good incentive for employees. The same is true of most known benefit programs.
Thus, such incentives would not only be reflected not only in terms of productivity, but also in other motivations such as the perception of a real concern on the part of the employer and a real sense of belonging and commitment to the company.
Regarding whether the total or net pay is affected by the inclusion of taxable benefits, the answer is no, since this would already be considered as an extra in the employee’s income. There are experts who consider this as something similar to a gift card.
And, giving rise to another popular doubt: do they pay taxes for taxable benefits? The answer is a big no, precisely because it is something provided purely by the company and not by external entities.
If you have doubts about including these services in your company, we invite you to read another article in our blog. In it we tell you three reasons to hire benefit programs in your company. Click here to read it.
Looking for good employee benefit programs in Canada? Lewer has the solution!
At this point, you have surely understood what are taxable profits in Canada, as well as the importance they have in any company. We hope we have been able to clarify your possible doubts with this article and that you have more clarity on what to do if you are an employer.
As you have learned, taxable benefits in Canada (and in the rest of the world) can be very helpful for workers and they work through benefit products such as the ones we offer at Lewer Canada.
Want more information about Lewer’s employee benefit programs in Canada? Click on the link to learn more. You will find options ranging from life insurance to dental care programs.Are you clear on what a taxable benefit is? Do you have any questions or would you like to contract any of these services in your company? Contact us You can find the option on the top bar of this site. Also, for a more personalized attention, you can visit us at 3131 boul. Saint-Martin Ouest, bureau 410 Laval, Quebec!