Is there such a thing as free parking?: Employer-provided spot generally taxed, but exceptions exist
Earlier this week, the real estate services company Colliers International
released its fifth annual North America Parking Rate Survey. It found that rates
for unreserved spots in urban centre parking lots increased an average of 2.4%
across Canada, with the median price being $170.53 per month. Reserved spots for
one month ranged from a high of $460 in Toronto to a mere $128 in Regina.
With the already hefty cost of parking on the rise, now might be an ideal
time to negotiate free parking with your employer. But is it a taxable benefit?
That depends. The Canada Revenue Agency's official position is that
employer-provided parking will generally constitute a taxable benefit to the
employee. The amount of the benefit is based on the fair market value of the
parking, less any amount you pay to use the space.
But what if your employer can't properly determine the fair market value of
the parking spot? For example, let's say you work in an industrial park or
shopping mall where free parking is available to both employees and customers.
In that case, the CRA's position is that no benefit need be imputed for the
value of the parking.
Similarly, no taxable benefit arises where an employer provides what the CRA
refers to as "scramble parking," meaning there are not enough spaces in the lot
available for all employees to park there and the spaces that are available are
on a first-come, first-served basis.
The CRA also makes an exception for employees with disabilities: their
parking benefit will not be taxable.
What if you require your car for business purposes during the day, perhaps to
visit customers or suppliers? Again, the CRA is somewhat lenient and will not
generally ding you for taxes on the benefit, provided you are "regularly
required" to use your vehicle to perform your employment duties.
Last year, the CRA stated that as long as an employee was required to use her
vehicle on the job three or more days in a five-day work-week, she would meet
the definition of "regularly required" and thus no taxable benefit would arise.
The rationale behind this position was to relieve employers from the
administrative nightmare that might otherwise arise if they had to actually
calculate the amount of the taxable benefit for each employee.
A note to deskers who've been denied a taxable benefit exemption: Don't
bother trying for a discount by loaning your spot to other employees while
you're out of town or on vacation. The CRA won't reduce your taxable employment
benefit since the space is technically available for you while you're away.
Still on a quest for free parking? Well, you could always slide onto a side
street. Keep in mind, though, that new legislation passed earlier this year
decrees you can no longer write off the cost of parking tickets.