Employers often are unaware of how to make sure employee benefits and payroll are in compliance, according to the Canadian Payroll Association (CPA). As a result, they put into practice reward and recognition policies that are non-compliant…
According to the most recent survey on employee benefits and retirement schemes conducted by the CPA, the allowances and benefits most often offered by employers are: health and dental care insurance, group term life insurance, allowances for automobile and motor vehicle expenses, and gifts and rewards. However, some of these benefits prove to be the most difficult to administer and employers fail to take them into account in their employees’ statement of income. This is particularly the case for gift cards and parking spaces, the study reports.
Recoveries following audit by Canada Revenue Agency (CRA)
1.5 million Canadian employers each year administer 901 billion dollars in wages and taxable benefits. Non-compliance of their management appears repeatedly in the list of the ten main adjustments required by CRA after a company audit. This year, for example, are salary expenses (i.e., undeclared compensations such as bonuses, commissions, cash payment, etc.), allowances for car, parking or even personal or living expenses. If the auditor finds anomalies during an audit procedure, the company can then be subject to recovery, potentially leading to payment of additional tax.
Be informed and trained for compliant policies
For information on compliance of the tax treatment of employee benefits, payroll managers mainly turn to the CPA and the CRA (85% and 80% of the survey’s respondents). While the CPA is a useful source of information, it also offers, across Canada, professional training seminars on benefits, pensions and taxable allowances. Other subjects are also covered to bring payroll into compliance with legislative and regulatory requirements at both the federal and provincial levels. Learn more at: www.paie.ca.