Personal Finance

Is employer provided parking a taxable benefit?

  • Last Updated:
  • Apr 6th, 2019 10:48 am
[OP]
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Apr 8, 2002
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Is employer provided parking a taxable benefit?

My previous employer was recently audited and it was deemed that the parking they provided to employees was a taxable benefit. This resulting in everyone getting reassessed and owing a significant sum in back taxes.

This seems pretty crazy to me, did someone in accounting mess up royally? What should the company have done? What can I do?
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Mar 3, 2018
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Yes it is a taxable benefit at the FMV parking rate. Usually what happens when a company gets audited they will eat the retroactive tax cost. CRA will ask the company do you want us to reassess all your employees or do you the company want to make a one time payment of the equivalent tax and interest. Going forward its then added to employee T4 slips.

This company has decided to cheap out and let CRA tax the past benefit on the employees. Most companies don’t do this as it angers their employees. Or they decided not to cover employees who have left like yourself.
Member
Jul 25, 2008
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ottawa
Driftwood wrote:
Apr 4th, 2019 1:59 pm
My previous employer was recently audited and it was deemed that the parking they provided to employees was a taxable benefit. This resulting in everyone getting reassessed and owing a significant sum in back taxes.

This seems pretty crazy to me, did someone in accounting mess up royally? What should the company have done? What can I do?
yes, this is right, and entirely the company's fault. IIRC the court case that finalized CRA's current interpretation was in 2009.

Contact your former employer and ask them to reimburse you (because the re-imbursement will be taxable, they'll have to give you more than what the CRA wants). If not contact CBC Go Public.
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Jan 19, 2017
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Driftwood wrote:
Apr 4th, 2019 1:59 pm
My previous employer was recently audited and it was deemed that the parking they provided to employees was a taxable benefit. This resulting in everyone getting reassessed and owing a significant sum in back taxes.

This seems pretty crazy to me, did someone in accounting mess up royally? What should the company have done? What can I do?
Your employer probably deducted some expenses related to the free parking provided to it employees.
[OP]
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Damn, this could be an uphill battle for me. I worked there for 6 years, the reassessment was only for 2016. Could this happen for the other years?
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CRA can only go back three years as earlier years would be statute barred. So technically 2017 and 2018 are still open.
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Oct 27, 2018
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Beside the tax, CRA may assess late interest and penalty.

Given this circumstance, you may qualify for interest and penalty relief under the taxpayer fairness provisions.
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s7yl3x wrote:
Apr 4th, 2019 5:48 pm
Beside the tax, CRA may assess late interest and penalty.

Given this circumstance, you may qualify for interest and penalty relief under the taxpayer fairness provisions.
Shouldn't be any penalties but interest is pretty much a certainty. I would suggest that a compromise on this would be for the company to pay any interest charges but OP is legitimately responsible for the taxes.
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Driftwood wrote:
Apr 4th, 2019 4:50 pm
Damn, this could be an uphill battle for me. I worked there for 6 years, the reassessment was only for 2016. Could this happen for the other years?
What's the average value of monthly parking in your previous employer's area?
[OP]
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skeet50 wrote:
Apr 4th, 2019 6:27 pm
What's the average value of monthly parking in your previous employer's area?
Probably would have been around $150ish but the reassessment added almost 4k to my income.
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How is it determined whether parking should be deemed a "benefit"? Is it solely based on location, if it's in an area where everything is pay-for-parking (ie downtown location, etc)?

Or even a private property, employer-owned parking lot can still be considered a " benefit"?

The level of taxation is beyond ridiculous in Canada...
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DaveTheDude wrote:
Apr 4th, 2019 5:18 pm
CRA can only go back three years as earlier years would be statute barred. So technically 2017 and 2018 are still open.
Would this not pass the "fraud" barrier? I am not a tax lawyer.
For legal topics and discussions, the opinion, guidance, and thoughts provided are my own and are not considered to be legal advice, in any manner.
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I wonder too. If it's a gated parking place where people pay but you are exempt from payment, that sounds like a taxable benefit. But if it's in an industrial area, or a plaza type place where there's a big parking lot, not gated, and everybody parks there free, can that still be deemed taxable benefit?
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angryaudifanatic wrote:
Apr 5th, 2019 8:57 am
Would this not pass the "fraud" barrier? I am not a tax lawyer.
Wouldn’t consider the OP as being negligent or fraudulent in preparing their tax return. A reason CRA can open and reassess statue barred tax years. This is basically the employer failing to report a taxable benefit on an employee’s T4 slip. Also the taxing of a parking benefit is relatively new and not all employers are aware of it.
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Arrgh wrote:
Apr 5th, 2019 9:00 am
I wonder too. If it's a gated parking place where people pay but you are exempt from payment, that sounds like a taxable benefit. But if it's in an industrial area, or a plaza type place where there's a big parking lot, not gated, and everybody parks there free, can that still be deemed taxable benefit?
CRA considers the fair market value of employer-provided parking to be nil where the employer’s business operates from a shopping centre or industrial park where parking is available for free to both employees and non-employees.

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