PERSONAL TAX TRAINING

EMPLOYER-PROVIDED PARKING

Employer-provided parking is often considered a taxable benefit based on its fair market value (FMV). However, specific conditions may exempt certain parking arrangements from being taxed. Here’s an overview of CRA guidelines, exceptions, and relevant court rulings.

General Tax Rules

• The taxable value of parking is determined by subtracting any amount paid by the employee from the FMV of the parking space.
• The FMV reflects what someone would reasonably pay in the open market for similar parking privileges.

Exemptions from Taxation

The following circumstances may exempt employer-provided parking from being taxable:

• Scramble Parking: Parking spaces that are not assigned and operate on a first-come, first-served basis are non-taxable if:
  • There are significantly fewer parking spaces than employees requiring parking (e.g., two spaces for every three employees).
  • Access is unpredictable or usage is not guaranteed.
• Work-Related Use: If an employee is required to use their vehicle regularly for work purposes (e.g., at least three days per week), parking benefits provided for this purpose are not taxable.
• Accessibility Needs: Parking provided to accommodate an employee with mobility impairments or disabilities is non-taxable.

Additional CRA Conditions

For an employer-provided parking arrangement to remain non-taxable, it must meet all CRA requirements, such as being accessible to all employees under similar conditions and not linked to personal convenience. Examples of taxable and non-taxable scenarios include:

• Taxable: Parking spaces assigned to specific employees for convenience or personal use.
• Non-Taxable: Scramble parking where demand exceeds availability, or spaces provided due to work-related needs.

Legal Precedents

Numerous court cases have clarified the taxability of parking benefits:

• In Bernier and Toronto Parking Authority, parking provided for personal convenience was ruled taxable.
• In Long and Saskatchewan Telecommunications, parking benefits were deemed non-taxable because they were work-related or incidental.

Reporting Obligations

Employers must report taxable parking benefits on employees' T4 slips. These amounts are subject to CPP contributions and income tax deductions at source.

Temporary Changes (COVID-19)

During COVID-19 workplace closures, employer-provided parking was generally non-taxable. However, once employees resumed regular work activities, the standard rules for taxable benefits were reinstated.