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Tax Free Benefits Available From Your Employer

Published: 15 June 2006

As an employee of a company, be it your own company or totally unrelated employers, the number of deductions available to you are very limited. You are probably aware of the standard deductions such as deducting a contribution to your RRSP or investing in tax shelters, but did you know about the following:

Company contributions to your registered pension plan

Your employer can contribute to a registered pension plan on your behalf. The contributions are not deductible to you as the employee but can deductible to your employer. When you withdraw from the plan, the withdrawals are taxed to you at the tax rate in effect in the year of the withdrawal. This can be beneficial if your income is lower in your retirement years.

Employer contributions to group accident, disability, or critical-illness insurance

No one ever wants or plans for an accident to happen or an illness to strike so why pay for these premiums out of your after tax personal dollars? If you never make a claim there are no tax implications to you. However, if you are faced with an illness or disability, you will be taxed on the payout in the year it is received at the rate in effect for that year.

Social or athletic club dues

If your membership in a social or athletic club may potentially benefit the employer’s business, your employer can pay your initiation fees and the subsequent monthly dues. The company cannot deduct these fees for tax purposes but considering the use of after tax corporate dollars versus after tax personal dollars, this could be a very favourable benefit

Uniforms, special clothing or safety wear

If you require uniforms, special clothing or safety wear the cost plus any cleaning can be supplied to you by your employer. This also includes company logo wear.

Tuition fees

So long as the courses will benefit the employer, you can have your employer pay for any personal development course ranging from an MBA to a computer software course.

Child care that is managed directly by the employer

Child care supplied by your employer at a centre managed by your employer, whether or not it is located at their place of business, is a benefit becoming increasingly popular amongst corporations

Computers provided by the employer

Be it a lap top or a desk top any computer can be supplied to you by your employer on a tax free basis

Work permit fees

If you are planning to work in the United States or any other country, fees paid to allow you to work in that other country can be paid by your employer.

About the Author

This article was written by Gabrielle Loren -- a partner with Loren & Company, CGA's located in North Vancouver, BC and can be reached at gabrielle@loren.bc.ca, at 604-904-3807 or check out their website at www.loren.bc.ca

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previous page: Should I Incorporate?
page up: Understanding Taxes
next page: The Dreaded Tax Department