January 28, 2019
CRA Updates Cell Phone Tax Law Language, A Warning To All Businesses To Deploy A Solution Like mobilityView Now!
CRA simplifies cell phone tax law language making it even more clearly plain to all businesses and employees of their intent
Toronto, 28th January2019 – The Canada Revenue Agency (CRA) – administers tax laws for the Government of Canada and for most provinces and territories, has revised and simplified the language it uses to explain cell phone tax law guidance to:
- Full / part-time employees
- Non-permanent contract workers
- Gig workers (a term borrowed from the music industry to describe contract workers that have the luxury of picking and choosing contracts they work on to suit their lifestyle, due to a high demand for their skills and experience)
The changes make it even more clear of the CRA’s intent, to apply these tax laws even more stringently to all businesses, permanent / non-permanent employees and the self-employed. As is custom with tax authorities, there always is a process of socialising and explaining the impact of new tax laws, including a period of time for businesses to make adjustments and preparations to implement changes to payroll / expense systems and business processes. The CRA first published changes to the cell phone tax policy in December 2017, pertaining to businesses, and in January 2018 for employees.
The CRA’s latest, plain-talking, revision of cell phone tax law advice sheds even more clarity on some contentious areas, where many businesses may have felt no action was necessary or to take a course of action that falls short of meeting the CRA’s requirements in full.
mobilityView – the leading provider of mobile data platforms for mobile smart devices (smartphones and tablets), has been tracking changes to the CRA cell phone tax laws, providing advice and guidance to businesses of all sizes (SoHo, SMB, Large National Enterprises and Multi-national Corporations) for many years, concerning global taxation trends and their impact on corporate wireless strategy. As a global thought leader and supplier of Mobile Cost Management (MCM) enterprise cloud solutions to all industry sectors, mobilityView brought to attention the CRA’s previous changes to the cell phone tax law guidance in May 2018, click here to read.
“Businesses claim that the CRA’s approach to this cell phone tax law is unenforceable. Many businesses point to the inability of all wireless carriers to provide the level of detail they would need in order to comply with the CRA rules. But, the CRA is well aware of mobilityView’s MCM Platform and knows that they can enforce their rules with our technology,” says Thom Damstra, CEO of mobilityView. “Also, many businesses have opted to implement simple procedural solutions, such as a Stipend (monthly allowance, defined by the employer, and paid to the employee for business use of a cell phone), that still leaves the business and all employees facing tax implications. There is only one way to comply with the CRA’s cell phone tax laws and that is to demonstrate business use of all wireless devices / assets. The MCM Platform automates this through patented technology (in 3 continents, including the USA, and pending in over 83 other countries) and automatically generates tax compliant expense reports for employee reimbursement – for all calls, SMS messages and data bytes consumed by mobile applications. This is also why mobilityView is in discussions with wireless carriers in Canada to provide this level of detail to all their customers.”
The plain-talking advice from the CRA applies to all types of wireless deployment strategies utilised by business to manage wireless device fleets:
- COPE (Company Owned/Personally Enabled)
- COBO (Company Owned/Business Only)
- COLD (Corporately Owned Locked Down)
- CYOD (Choose Your Own Device)
- BYOD (Bring Your Own Device)
- BYOO (Bring Your Own Operator)
Stipend (monthly allowance, defined by the employer, and paid to the employee for business use of a cell phone)
The CRA’s newly revised plain-talking cell phone tax advice can be seen in full here and outlines the following level of clarity:
- If you reimburse your employee for the cost of their own cell phone (or other handheld communication device), the fair market value (FMV) of the cell phone or device is considered a taxable benefit to the employee
- If you pay for, or reimburse the cost of an employee's cell phone service plan, or Internet service at home to help carry out their employment duties, the portion used for employment purposes is not a taxable benefit
- If part of the use of the cell phone or Internet service is personal, you have to include the value of the personal use in your employee's income as a taxable benefit.
- The value of the benefit is based on the FMV of the service, minus any amounts your employee reimburses you. You can only use your cost to calculate the value of the benefit if it reflects the FMV.
- For cellular phone service only, we do not consider your employee's personal use of the cellular phone service to be a taxable benefit if all of the following apply:
- The plan's cost is reasonable
- The plan is a basic plan with a fixed cost
- Your employee's personal use of the service does not result in charges that are more than the basic plan cost
“In this updated Cell Phone Tax Law advice from the CRA, they have provided key clarity on the following areas:
- In determining the fair market value of a cell phone or wireless subscription plan – businesses can no longer leverage, or hide behind, their buying power to attain preferential pricing from wireless carriers and are required to demonstrate a FMV linked to publicly available basic cell phone and wireless subscription plans
- The business use of a cell phone, or any other wireless device, has to be demonstrated
- Internet service at home, paid for by the employer, business only usage has to be demonstrated
mobilityView meets and exceeds the provisions in the CRA’s cell phone tax law and is the only solution on the market that allows you to track every second, every text message, and every byte of data on a wireless cellular network and on Wi-Fi hotspots / networks to demonstrate business use of any smart mobile device, Internet service at home and even apportion the equivalent business use of a wireless device’s hardware cost, to the business, for employee rembursement,” says Thom Damstra, CEO of mobilityView.
For employees, contractors or gig workers, the laws haven’t changed since the January 3rd 2018 update, which can be found here. Even in this earlier change to cell phone tax laws, introduced by the CRA, it can plainly be seen that business / personal usage and cost must be calculated for voice and data, including being able to substantiate the calculations. “Interestingly, the tax law was changed for employers on December 27th 2017 and even greater clarity was given, by the CRA, in their November 20th 2018 update. Leading tax writers for the Globe & Mail and the National Post have specifically called out changes to the tax code and the on going enforcement (details can be found here),” says Thom Damstra.
The MCM Platform by mobilityView is a cloud service that enables individuals to properly account for the business and personal usage and cost of a mobile smart device (smartphone, tablet, phablet, etc.). The tool is great for any individual to automate their mobile smart device expense claim process for economic reimbursement and accounts for voice, SMS, data and roaming scenarios. The solution is also highly applicable for businesses of any size, seeking to only pay for business usage of mobile assets. It provides a complete view of all mobile costs, previously not thought possible.
Employers can sleep at night knowing that their costs are contained and employees can experience mobile democracy – they are freed up to do whatever they want on their mobile device: Play video games, watch movies; engage in social media with utter privacy. “The MCM Platform provides clear unequivocal and immediate return on investment for businesses of any size”, said Thom Damstra, CEO of mobilityView. “The flexibility of the platform opens up the tantalizing possibilities to simultaneously reduce cost, provide new flexi benefits, and increase the usage of mobility within any organization. Until now these three simultaneous benefits have been impossible to deliver.”
mobilityView’s Smart Business Insight (SBI) Platform drives a series of solutions, such as the MCM Platform, which all deliver quantifiable and unambiguous digital transformation. The solutions are applicable for businesses of all sizes, as a function of data-driven insights from mobile smart devices (smart phones, phablets, tablets, etc.). mobilityView exists to drive business process change that results in accelerating the achievement of business goals and objectives, and profitability.
mobilityView enables any business to align mobile smart devices to business goals and objectives, to drive efficiency and profitability, plus an increase in measurable sales and marketing engagement effectiveness with customers. mobilityView transforms mobile smart devices into powerful strategic assets driving measurable productivity improvements and lower costs for a leaner, more competitive, business.
mobilityView enables businesses to gain insight, understand mobile spend, reduce mobile costs and simplify mobile expenses, to ensure tax compliance, while putting end users in control of their own privacy. The solution allows enterprises to be data-driven, customer centric and have the right combination of ideas and information to make the strategic decisions.
Headquartered in Toronto, Canada, mobilityView was incorporated in 2014, with an impressive Board of Directors, very knowledgeable of enterprise mobility, focused on growth and good governance. To find out more, please visit our website at https://www.mobilityview.com