If the employee is considered to have received a taxable benefit, the employee will be taxed to the extent that the value of the benefit exceeds the amount the employee paid, if any, to the employer for the parking. The employee will also be assessed for Canada Pension Plan (CPP) contributions and employment insurance (EI) premiums on the benefit amount to the extent that the employee has not otherwise paid the maximum CPP and EI amounts for the year.
Similarly, the employer may also be assessed for employer CPP contributions and EI premiums on the amount of the benefit where it has not otherwise paid the maximum amounts for that employee for the year. Finally, GST/HST may apply to the amount of the benefit.
Employer-Provided Parking as a Taxable Benefit
What the Courts Say
The Supreme Court of Canada has held, in R. v. Savage, that in order for a benefit to be a taxable benefit to an employee, the receipt of the benefit must confer an economic benefit on the employee. In determining whether the employee has received an economic benefit, the courts normally look at whether the benefit has a business purpose to the employer. Where there is a business purpose, the benefit is considered to be that of the employer rather than the employee and, consequently, there will be no taxable benefit to the employee.
The Tax Court of Canada has considered in several cases whether employer-provided parking resulted in a taxable benefit to employees. These cases show that the determination of whether an employee has received a taxable benefit from employer-provided parking will depend on the facts relevant to the particular employee.
