PERSONAL TAX TRAINING

MLA EXPENSE ALLOWANCE

Members of Legislative Assemblies (MLAs) often receive allowances to cover expenses incurred while performing their official duties. These allowances are governed by the Canada Revenue Agency (CRA) guidelines to determine their tax implications. The tax treatment depends on the type of allowance and its purpose.

Non-Accountable Allowances

For tax years before 2019, MLAs could exclude certain non-accountable allowances from taxable income if they did not exceed 50% of their salary or remuneration. Starting in 2019, this exemption was removed, and all such allowances are now included as taxable income.

Reasonable Allowances

Allowances provided to MLAs for travel outside their home municipality or provincial capital for official duties may not be considered taxable if they meet CRA criteria, such as being reasonable in amount and related directly to their employment duties. Examples include:

• Travel allowances for attending legislative sessions or constituency meetings.
• Living allowances for maintaining temporary residences near the legislative assembly.

Tax Implications

Under CRA guidelines, taxable allowances must be included in the MLA’s income. Allowances that cover personal expenses or exceed reasonable amounts are treated as taxable benefits. Examples of taxable and non-taxable scenarios include:

• Non-Taxable: Travel allowances for work-related purposes that meet CRA guidelines.
• Taxable: Non-accountable allowances exceeding CRA-specified limits or allowances used for personal benefit.

Employer Responsibilities

• Reporting: Taxable allowances must be reported on the MLA’s T4 slip as part of their income.
• Payroll Deductions: Employers must deduct income tax, Canada Pension Plan (CPP) contributions, and Employment Insurance (EI) premiums on taxable allowances.

CRA Guidance

The CRA provides specific administrative policies to determine the taxability of MLA allowances. Employers and employees must follow these guidelines to ensure compliance and accurate reporting.

Additional Resources

• CRA – Benefits and Allowances
• Employers' Guide – Taxable Benefits and Allowances