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Employee purchases through payroll deductions; Taxable benefit if no receipt?; Taxable benefit for car with company logo?
By Annie Chong
|Canadian Payroll Reporter|Last Updated: 04/04/2016

Employee purchases, taxable benefits

Question: We offer a program that allows employees to buy electronic products, such as televisions and laptops, from the company and pay for them over an extended period through payroll deductions. Employees pay the full cost for the items they buy, but they pay for them over a number of months (e.g., up to a year or more). If an employee buys an item through the program, does the employee have a taxable benefit?

Answer: The employee may have a taxable benefit. It depends on whether the employee has to pay interest on the outstanding amount owing for the item purchased. If the employee has to pay interest and the rate of interest is higher than the rate that would apply on a commercial loan (i.e., a loan not related to the employee’s employment), there would be no taxable benefit.