June 11, 2019
Free parking is a nice workplace perk, but the taxman still wants his cut
Free parking is generally considered a taxable employment benefit
There’s no such thing as free parking.
Take Toronto-based Catholic high school and elementary teachers, for example, who this week learned that they will soon have to pay for their own parking at school lots. Full-time teachers and administrators will be charged $10 per day to park their vehicles on school property as a result of new fees approved by board trustees at a special budgetary meeting.
But, even if you’re among the lucky workers who still get free parking at your place of employment, it’s often not truly free as the taxman generally considers free parking to be a taxable employment benefit.
Over the years, there have been a variety of tax cases in which taxpayers have challenged the taxability of employer-provided parking, many of which are based on the employee arguing that their free parking was primarily of benefit to their employer and thus should not be taxable. The most recent decision, out earlier this week from the Federal Court of Appeal, involved a Calgary-based flight attendant of Jazz Aviation LP.
The taxpayer had been a flight attendant with Jazz for more than 25 years and lived in a residential community in northwest Calgary. It took him about 25 minutes to drive from his home to the Calgary International Airport, which is located in the northeast quadrant of the city. While at the airport, he made use of the free parking pass that Jazz provided to him, which allowed its employees to park at the “Green Lot” at the airport. That lot, which had over 2,500 spaces, never filled completely and was accessible 24 hours a day, seven days a week. Anyone who worked at the airport could obtain a parking pass, regardless of whether an employer paid for it.
What Does Parking & Cellphone Have In Common From A Tax Perspective
They are both a taxable benefit; as evidenced by Jamie Golombek the key determination of the tax court was:
In the court’s view, the fundamental issue to be decided was whether an employer has conferred something of economic value on an employee, notwithstanding that the receipt of such value “can be mutual, and often is.” Free personal use of a cellphone to play video games and watch Netflix, etc. would be most definitely a benefit and a rather large benefit.
Rumour has it that the accounting firms are beginning to realize we have been right all along… Ask your accountant and book keeper – “Are you now getting details of your cellphone bills? What are those details and why?”Back