August 10, 2017
All Tax Articles

Parking pass for employee was a taxable benefit

If an employer pays for an employee’s parking at or near the work place, the amount paid is normally a taxable benefit for the employee. As such, the employer must report the amount on the employee’s T4 slip.


According to the Canada Revenue Agency (“CRA”),  a taxable benefit does not arise if the parking provided is “scramble parking”, which generally means a public parking lot where the number of available spaces is less than the amount of parking passes available. For example, if there are 100 parking spots available during the day and more than 100 employees have parking passes, this will normally constitute scramble parking and there will be no taxable benefit.


In the recent Smith case, the taxpayer was a flight attendant with a Canadian airline. He lived in Calgary, and was provided a free parking pass from the airline for parking near the Calgary airport. Apparently, there were many more parking spots available than the number of parking passes provided, so it was not “scramble parking”. The CRA assessed the taxpayer, including in his income the amount paid by his employer for the parking pass.


The taxpayer argued that the parking pass should not be a taxable benefit. He argued that the airline required the flight attendants to be “reliable and flexible” and could be asked to work on short notice. Essentially, he argued that the parking pass was more of a benefit to the airline because the attendants would be more likely to show up for work on a punctual basis.


On appeal to the Tax Court of Canada, the CRA assessment was upheld. The Court conceded that the airline may have benefitted somewhat from the parking passes. However, it also concluded that the “evidence did not show that flight attendants who commuted to the Calgary airport using their own car were more reliable and flexible than those using other means of transportation”. Therefore, the parking pass benefited the employee more than the employer, and it was a taxable benefit to the employee.

This letter summarizes recent tax developments and tax planning opportunities from a third-party affiliate; however, we recommend that you consult with an expert before embarking on any of the suggestions contained in this blog post, which are appropriate to your own specific requirements. Please feel free to get in touch with Lee & Sharpe to discuss anything detailed above, we would be pleased to help.
Adam H. Sharpe

Hello, my name is Adam Sharpe, I am a partner at Lee & Sharpe.

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