Thank you very much for your help and clarification! It’s great!
W.B., CPA Member

If an employer directly reimburses an employee for automobile costs that are associated with the employee’s own automobile, such as gas, repairs and insurance, these reimbursements will be considered a taxable auto allowance and will be subject to all applicable statutory deductions: federal and provincial income tax, Canada Pension Plan (CPP), Quebec Pension Plan (QPP), Employment Insurance and Quebec Parental Insurance Plan (QPIP).

If the employer makes the same payments on behalf of the employee to the applicable organization, then the payments will be subject to federal and provincial income tax and CPP/QPP only, as the amounts will not be deemed as cash income to the employee.

In both instances, these amounts should be reported in Box 14 and Code 40 of the T4, as well as Box A and L of the RL-1 (QPIP if employed in Quebec).


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2015 - Click here