--- title: "Taxable vs Non-Taxable Benefits in Canada: What Goes on the T4" url: https://www.everstonecpa.com/blog/taxable-vs-non-taxable-benefits-canada description: "Which taxable benefits belong on the T4 and which perks do not, and the few that carry GST/HST. Check what payroll should have been withholding all year." type: guide updated: 2026-10-12 summary: "Most benefits an employer provides are taxable and belong on the T4. Under CRA administrative policy some are not: non-cash gifts and awards up to $500 a year, employer-owned cell phones required for work, and parking where an employee regularly uses a vehicle for the job." faq_count: 6 publisher: EverStone CPA Inc., a Chartered Professional Accountant firm registered with CPA British Columbia and CPA Alberta service_area: British Columbia, Alberta, Ontario and Manitoba language: en-CA contact: info@everstonecpa.com · https://www.everstonecpa.com/book-online --- [Home](https://www.everstonecpa.com/) [Blog](https://www.everstonecpa.com/blog) Taxable vs Non-Taxable Employee Benefits in Canada Payroll # Taxable vs non-taxable benefits *— what goes on the T4* By EverStone CPA · Updated September 2026 · 8 min read **Quick answer:** Most benefits an employer provides are taxable and belong on the T4. Under CRA administrative policy some are not: non-cash gifts and awards up to $500 a year, employer-owned cell phones required for work, and parking where an employee regularly uses a vehicle for the job. Taxable is the default; the exceptions are narrow. **Rather have a CPA handle this?** A CPA at EverStone replies with a straight answer and a fixed fee for your situation. [Get My Fixed Quote →](https://www.everstonecpa.com/book-online) ## Key takeaways - The default is taxable — the exceptions are narrow CRA administrative policies. - Non-cash gifts and awards are non-taxable up to a combined $500 fair market value a year. - Cash and near-cash gifts, including most prepaid cards, are always taxable. - Long-service awards have their own separate $500 limit, and their own conditions. Owners see perks as goodwill; the CRA sees compensation. Almost every employer-provided benefit starts as taxable, must be valued and goes on the employee’s T4. The exceptions are real but narrow and conditional. Sorting non-taxable and taxable benefits means checking each perk against a specific CRA administrative policy and every condition in it, as the sections below do. ## Taxable benefits in gifts and awards: the $500 rules Which employee benefits are taxable Employee benefits under CRA administrative policy, as set out on this page. The two $500 limits are separate — unused room in one cannot be moved to the other. | Benefit | Treatment | Limit or condition | | Non-cash gifts and awards | Not taxable | Combined fair market value of $500 or less a year, including taxes | | Long-service awards | Not taxable | Its own separate $500 limit; recognizes 5+ years, and 5+ years since the last such award | | Anything above either limit | Taxable on the excess | — | | Trivial items — coffee, tea, T-shirts, mugs, plaques, trophies | Not counted | Do not use up either $500 limit | | Cash and gift cards | Taxable | Not covered by the exception | | Employer-owned cell phone | Not taxable | Where required for work | | Parking | Not taxable | Where the employee regularly uses a vehicle for the job | Generally, gifts, awards and long-service awards are taxable. Under the CRA’s administrative policy, a **non-cash** gift or award is not taxable where all of the following apply. The combined fair market value of an unlimited number of non-cash gifts and awards is **$500 or less** in the year including taxes. The gift must be for a special occasion such as a religious holiday, a birthday, a wedding or the birth of a child; a recognition award is for the employee’s overall contribution to the workplace; and it is not a reward tied to job performance. Anything above $500 is taxable on the excess. Small items of trivial value — coffee or tea, T-shirts, mugs, plaques and trophies — are not counted against the $500. ### Cash and near-cash are always taxable The policy does not apply to cash or near-cash. Near-cash includes anything easily converted to cash, digital currency, and prepaid cards issued by a financial institution on a major payment network. A reimbursement — where the employee buys something and submits a receipt — is cash. ### When a gift card counts as non-cash A gift card is treated as non-cash only where all of the following apply. It comes preloaded and can only be used at a single retailer or an identified group of retailers; its terms and conditions clearly state the amount cannot be converted into cash; and you keep a log recording the employee’s name, the date, the reason, the type of card, the amount and the retailer. Miss any of those and the card is near-cash, and taxable. ### Long-service awards A long-service award is non-taxable where it is a non-cash gift or award and recognizes 5 or more years of service. At least 5 years must have passed since the last long-service award to that employee, and its fair market value is **$500 or less** including taxes. This limit is separate: unused room in one $500 limit cannot be moved to the other. Not sure how this applies to you? Every situation is different. Send an enquiry to a CPA and get a straight answer, plus a fixed quote before any work starts. [Send an Enquiry →](https://www.everstonecpa.com/book-online) [See fixed fees](https://www.everstonecpa.com/pricing) **Giving staff benefits?** We set each one up correctly on payroll, taxable or not, and report it on the T4s, as part of payroll on a fixed monthly fee. [Get a payroll quote](https://www.everstonecpa.com/book-online?service=payroll#enquiry-form). [Get My Fixed Quote](https://www.everstonecpa.com/book-online?service=payroll#enquiry-form) ## Cell phones and internet A phone and internet **allowance** is always taxable. A phone you own and require for duties is not. A *service plan* is not taxable if required for duties, at a reasonable fixed cost, with personal use adding no charges; any excess is taxable unless repaid. Reimbursing a phone the employee bought is taxable. Related: [Cell phone allowance rules](https://www.everstonecpa.com/blog/business-use-of-cellphone-internet-canada). For home internet, the business-use portion is not a taxable benefit. ## Parking Parking you provide or reimburse is generally taxable, valued at fair market value — the price a similar spot would fetch in the surrounding area, not what it costs you. Three situations sit outside that: - **Business use.** Not taxable where the employee regularly has to use a vehicle to perform their duties. The CRA treats “regularly” as an average of at least 3 days in a 5-day work week, and will accept a proration below that. Commuting between home and work does not count as business use. - **Shopping centre or industrial park.** Not taxable where the lot is open to employees and the public, spaces are free, and spaces are not assigned. - **Scramble parking.** Not taxable where there are no more than 2 spaces for every 3 employees who want parking, spaces are unassigned, and parking is offered to everyone who wants it. ## Vehicles are their own subject An employer-provided vehicle is not a simple benefit — it produces a standby charge and an operating expense benefit, calculated on their own rules. That is covered separately in [the company car taxable benefit](https://www.everstonecpa.com/blog/company-car-taxable-benefit-canada), and the alternative of paying a per-kilometre allowance is in [vehicle and mileage deductions](https://www.everstonecpa.com/blog/vehicle-mileage-deductions-canada-business). The line between a benefit and a reimbursement matters here. A payment that repays a documented business cost is not a benefit at all. See [reimbursing yourself properly](https://www.everstonecpa.com/blog/petty-cash-and-owner-reimbursements-canada) for how that distinction is evidenced. ## Reporting and the T4 A taxable benefit is added to income, generally attracts CPP and income tax withholding, and may attract EI depending on whether it is cash. It goes on the T4 (see [slip filing deadlines](https://www.everstonecpa.com/blog/t4-t4a-t5-slip-filing-deadlines-canada)). The usual failure is finding it at year-end, after twelve pay runs without withholding. **Where owner-managers get caught:** the gift and award policy does not apply to non-arm’s-length employees, a relative, a shareholder, or a person related to them. A $500 gift card to yourself is not covered by the exception. ## The bottom line Assume taxable, then check for a specific CRA policy and every condition. Keep the gift card log and parking research, and run benefits through payroll as they happen. Our [payroll services](https://www.everstonecpa.com/payroll-services-canada) handle benefits and T4s; paying yourself is in [salary vs dividends](https://www.everstonecpa.com/blog/salary-vs-dividends-2026). Sources - [Canada Revenue Agency — Gifts, awards, and long-service awards](https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/payroll/benefits-allowances/gifts-awards-social-events/gifts-awards-long-service-awards.html) - [Canada Revenue Agency — Cell phone and internet services](https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/payroll/benefits-allowances/provided/cellular-phone-internet-services.html) - [Canada Revenue Agency — Parking](https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/payroll/benefits-allowances/automobile/parking.html) - [Canada Revenue Agency — Determine if a benefit is taxable](https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/payroll/benefits-allowances/benefits-allowances-chart.html) This article is general information for Canadian business owners and is current as of July 2026. It is not tax, legal or accounting advice, and it does not create a client relationship. Tax rules change and your situation is unique, so please [speak with a CPA](https://www.everstonecpa.com/book-online) before acting on anything here. Health costs paid personally instead fall under a separate personal credit with a threshold of its own — see [the medical expense tax credit explained](https://www.everstonecpa.com/blog/medical-expense-tax-credit-canada). About this article **EverStone CPA** Prepared and reviewed by a CPA at EverStone CPA, serving businesses in BC, Alberta, Ontario and Manitoba. [About the firm →](https://www.everstonecpa.com/about) · [Send an enquiry →](https://www.everstonecpa.com/book-online) For the most common taxable benefit, a company vehicle, the [standby charge calculator](https://www.everstonecpa.com/vehicle-benefit-calculator) gives the T4 figure. ### Keep reading [The company car taxable benefit →](https://www.everstonecpa.com/blog/company-car-taxable-benefit-canada) [Hiring your first employee in Canada →](https://www.everstonecpa.com/blog/hiring-first-employee-canada-checklist) [T4, T4A and T5 filing deadlines →](https://www.everstonecpa.com/blog/t4-t4a-t5-slip-filing-deadlines-canada)[Restaurant tips and payroll: controlled versus direct tips, CPP, EI and the T4 →](https://www.everstonecpa.com/blog/restaurant-tip-reporting-payroll-canada)[Regulation 105: paying a non-resident for work done in Canada →](https://www.everstonecpa.com/blog/non-resident-withholding-regulation-105) FAQ ## Frequently asked questions **Are employee gifts taxable in Canada?** Generally yes, but under CRA administrative policy a non-cash gift or award is not taxable if the combined fair market value of all such gifts and awards is $500 or less in the year including taxes, the gift is for a special occasion, and it is not a reward for job performance. Amounts above $500 are taxable. **Is a gift card a taxable benefit?** It depends on the card. A gift card is treated as non-cash only if it comes preloaded, can only be used at a single retailer or an identified group of retailers, its terms state the amount cannot be converted to cash, and you keep a log with the employee name, date, reason, card type, amount and retailer. Otherwise it is near-cash and taxable. **Is a company cell phone a taxable benefit?** A cell phone you own and require the employee to use for their duties is not a taxable benefit. A service plan is not taxable if you require its use for employment duties, the plan has a reasonable fixed cost, and personal use does not create charges above the plan cost. A cash allowance for a phone is always taxable. **Is employer-provided parking taxable?** Generally yes, valued at the fair market value of a similar space in the area. It is not taxable if the employee regularly has to use a vehicle for their duties, which the CRA treats as an average of at least 3 days in a 5-day work week. Shopping centre lots open to the public and unassigned scramble parking can also be non-taxable. **What is the long-service award limit?** A long-service award is non-taxable if it is a non-cash award, recognizes 5 or more years of service, at least 5 years have passed since the last long-service award to that employee, and its fair market value is $500 or less including taxes. This $500 limit is separate from the one for other non-cash gifts and awards. **Do these gift rules apply to me as the owner?** No. The CRA’s administrative policy on gifts and awards does not apply where the gift or award is provided to a non-arm’s length employee, such as a relative, a shareholder, or a person related to them. For owner-managers, a gift routed through payroll is simply compensation. ## Not sure which perks belong on the T4? List the benefits you give and how many staff you have. A CPA replies by email within one business day with the treatment and a fixed fee. [Get My Fixed Quote](https://www.everstonecpa.com/book-online)[Book a Paid Advice Call](https://www.everstonecpa.com/advice-call) ## Have a question about this? Ask free through [the quick-question form](https://www.everstonecpa.com/quick-question); a CPA replies within one business day. Need more? A 45-minute **Advice Call** is $225 plus GST, credited to your first invoice if you become a client within 60 days. Want us to take it on? [Send an enquiry](https://www.everstonecpa.com/book-online). [Ask a Free Question](https://www.everstonecpa.com/quick-question) [Book a Paid Advice Call](https://www.everstonecpa.com/advice-call) Email info@everstonecpa.com ★★★★★ “…We switched to him last year for both our personal and small-business taxes — responsive, knowledgeable and quick.” Heather Powers · Google review **Run your own numbers with the free calculators:** [work out your instalments](https://www.everstonecpa.com/tax-instalment-calculator) · [run the salary-or-dividends numbers](https://www.everstonecpa.com/salary-vs-dividends-calculator) · [when the T2 has to be filed](https://www.everstonecpa.com/t2-deadline-calculator) [← T5018 reporting: what construction businesses must file about subcontractors](https://www.everstonecpa.com/blog/t5018-subcontractor-reporting-construction) [Terminating an employee: final pay, the vacation payout and the ROE →](https://www.everstonecpa.com/blog/terminating-an-employee-canada-final-pay) More on this subject: [our payroll guides](https://www.everstonecpa.com/payroll-hub). --- Source: https://www.everstonecpa.com/blog/taxable-vs-non-taxable-benefits-canada Prices: https://www.everstonecpa.com/pricing · Contact: info@everstonecpa.com · https://www.everstonecpa.com/book-online