Update on employment benefits due to the impact of COVID-19

As you may recall, the CRA announced a number of administrative rules to provide relief on employment benefits due to the pandemic for 2020. The CRA has now provided an update on how these rules will apply for 2021. Generally speaking, the original announcement for 2020 will now apply from March 15, 2020 to December 31, 2021 but some additional relief has been announced.

The following points should be noted in particular:

  • The computer and home equipment reimbursement rule has a maximum threshold of $500, and this limit applies for the entire period. For example, if an employee purchases a computer for $400 in 2020 and an office chair for $250 in 2021 that they will keep after the pandemic and are fully reimbursed, the amount over $500 (that is, $150) must be included in the employee’s income in 2021.
  • The CRA confirmed that accountable allowances are also eligible for the equipment reimbursement rule. An accountable allowance is one where the employee must account for their expenses by producing receipts and returning any amount they did not spend.
  • For employer-provided parking relief, the CRA now states that relief is applicable in situations when “a regular place of employment is closed due to COVID-19, including situations where employees have been sent home by the employer.” This wording appears to be broader than the original announcement which simply referred to the place of employment being closed.
  • The rules for commuting costs will also apply to employer-provided vehicles (specific reference should be made to the CRA page for more information).

We have asked the CRA to confirm that the additional relief applies to both 2020 and 2021. Note that the government had previously announced that the automobile standby charge relief applied to both 2020 and 2021. Finally, the CRA has published the 2021 T4130 Employers' Guide - Taxable Benefits and Allowances, which also includes these recent announcements.

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