Cell phone, taxable benefit or not?
Cell phones have become a work tool like any other. But in terms of taxation, it will depend on several elements that will be covered in this article.
Is it a refund or an allowance?
When the employer reimburses the employee for their cell phone plan, when the package is used primarily for employment purposes, and the employee provides detailed receipts, this is generally not a taxable benefit.
However, attention must be paid to, among other things, the following elements: the cost of the package must be reasonable and the reimbursement must be linked to the performance of employment functions.
When an employer pays an allowance to one of its employees without requiring receipts, it is generally considered a taxable benefit and this amount should be included in the employee's income.
Who Owns the Cell Phone?
When the employer reimburses the purchase of an employee's cell phone, it's generally a taxable benefit. However, if the employer provides the cell phone and remains the owner of the cell phone if the employee leaves the job, this will generally not be a taxable benefit.
So, in practice, when the employer provides the device and pays the flat rate to allow the employee to perform his duties, there is no taxable benefit. No additions to T4/RL-1, as long as the package is reasonable.
Practical examples
Nelson gets reimbursed every month when he submits the bills for his cell phone plan. This package is reasonable, used mainly for work and its personal use does not involve additional costs.
Charlie receives an allowance of $55/month without having to provide receipts or has had his device paid for by the company that employs him.
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Cell phone, taxable benefit or not?
