Dealing With Taxable Benefit Errors

A taxable benefit is a positive benefit offered to an employee by the firm of his employment in the form of cash, reimbursement or an allowance. Taxable benefits are added to an employee’s income which is then appended to the total income that can be deducted from the payroll.

Taxable Benefit Errors

Taxable benefit errors are the mistakes that are made when an employee receives a redundant taxable benefit. These errors can occur due to ignorance or may be executed on purpose. Mistakes caused due to ignorance can be altered depending on their severity and type. The overpayment can be then be redeemed by the employer in a limited manner. However, mistakes that take place consciously are subject to legal actions that can only be resolved with the payment of cash or other collaterals.

Common Taxable Benefits

In Canada, employees can benefit from many taxable benefits including:

Employment Insurance

Employment insurance is a taxable benefit provided to unemployed citizens till the period that they can find a new job or enhance their skills to find new employment. This benefit is applicable only if the concerned individual has a premium that they had been paying in a timely manner.

Vehicle Allowance

The vehicle allowance makes the company liable to pay off all the expenses that have been made by the employee for using his personal vehicle for official purposes. The expenses are calculated and added to the taxable income of the employee.

Rooms and Board

The employee receives a taxable benefit if they are provided with lodging, accommodation and food by the organization.

How to Deal with Taxable Benefit Errors

If Canada Revenue Agency (CRA) discovers that an employee is receiving more or less of the taxable benefits allocated to him, then CRA will file a legal action against the one who is responsible for the error. At times, it is possible that the accounting firm that the business has engaged committed an error or there might be a glitch in the software that they use, then it is the organisation’s responsibility to repay the overpaid amount to the CRA.

In some cases, there might be a situation where the employee may be unaware of the error he/she is committing. In this matter, CRA may deem the business owner responsible for the error, and the organisation may have to repay the money along with interests and financial penalties. However, CRA does not consider the company responsible if the error has been committed by an accountant or an employer in this regard. In cases when an employee is aware of the fact that he is committing an error, the CRA provides him with an opportunity to accept his mistake and reduce or eliminate the penalties. To understand the legalities of these errors and their methods of resolution, consult your tax attorney in Edmonton as soon as feasible.

Violation of the taxable benefits is considered as a federal offence. However, people tend to make mistakes subconsciously. In case of these errors, it is important for an employee takes appropriate action immediately after the oversight has taken place. If you are dealing with a similar issue regarding your employee, then it is highly advisable to consult a reliable tax attorney in Edmonton today.