Subject: Reporting Parking Taxable Benefits and Changes to Subsidized Parking Deduction Codes
January 11, 2011 Updated June 16, 2011
1.1. The purpose of this directive is to provide clients with information regarding (1) the Regional Pay System (RPS) capability to report on the regular tax slips parking taxable benefits in accordance with Canada Revenue Agency (CRA) and Ministère du Revenu du Quebec (MRQ) rules and (2) the usage of subsidized parking deductions codes in the RPS.
2.1 This Directive applies to employees who have parking provided by the employer, even if they do not have a parking deduction in the RPS.
2.2 System changes were implemented on November 19, 2010, to permit the entry of the parking taxable benefit where the fair market rate exceeds the actual parking payments made.
3.1. As per the CRA and MRQ rules, parking spaces provided by the employer free of charge, or at a price below the fair market rate, or any reimbursement made to an employee for the cost of a parking space are considered a taxable benefit.
3.1.1. The value of the taxable benefit corresponds to the fair market rate of the parking space minus any amount paid by the employee.
3.2. For any month where the employee pays the market rate for his parking space, there is no taxable benefit. Accordingly, an employee who paid various rates for parking during the year will have monthly taxable benefits that vary.
3.3.1. CRA rules on parking taxable benefits: Parking
3.3.2. MRQ rules on parking taxable benefits: Taxable Benefits IN-253-V
3.3.3. PWGSC, Real Property Branch list of parking sites and their concluded market rates: Market Rates For Parking - This information is only accessible to federal government employees, and only to federal departments and agencies.
3.3.5. Implementation approach of the Custodial Parking Policy: Implementation of the Custodial Parking Policy - This information is only accessible to federal government employees, and only to federal departments and agencies.
4. Procedures and Instructions
4.1 The Personnel Pay Input Manual (PPIM) will be updated to incorporate the relevant information contained in this Compensation Directive.
4.2. System Changes
4.2.1. System changes were implemented to allow the use of the current subsidized parking payroll deduction codes 739, 839, 969 and 972 to report parking taxable benefits on the employee's tax slips.
4.2.2. A new reference code is now required in field 71 (account coding/contract number) with the subsidized parking deduction codes:
- 739: Subsidized Parking
- 839: Subsidized Parking-Arrears
- 969: Subsidized Parking Quebec
- 972: Subsidized Parking Quebec-Arrears
4.3. The reference codes have been created to identify the different reasons for the parking taxable benefit. The codes are as follows:
- 001: taxable benefit for employees in the management category eligible for subsidized parking
- 002: taxable benefit for employees who receive subsidized parking under the Duty to Accommodate Persons with Disabilities in the Federal Public Service policy
- 003: taxable benefit for employees who pay less than the fair market rate (non-management category)
4.3.1. The reference codes will be reported in the Entitlement and Deduction System to allow the Treasury Board Secretariat (TBS) to monitor usage.
4.3.2. If the fair market rate for the parking space is more than the employee rate plus the employer subsidy, two transactions should be submitted in RPS to reflect the reasons for each taxable benefit. The subsidy paid by the employer for a management category employee would be reported under reference code 001 and the additional taxable benefit would be reported under reference code 003.
In order to allow duplicate transactions with the same deduction code to report different reference codes, further system changes are needed in the RPS. Clients will be informed once these changes are implemented.
4.4. Payroll deductions
4.4.1. Payroll deductions are authorized only when the employer provides parking. Payroll parking deductions are not allowable in cases where the parking is provided by a private sector third party.
4.5. Reporting a taxable benefit
4.5.1. In order to take advantage of the RPS capacity to report parking taxable benefits on the employee's tax slips, the corporate unit in your department responsible for parking will need to provide the compensation advisor with the following information regarding employees who are granted a parking space and who pay an amount below the fair market rates for parking:
- Full name of the employee
- Personnel Record Identifier (PRI)
- Whether the employee is in the management category or not
- Paylist (PL), if available
- The monthly rate charged to the employee
- The fair market rate of the employee's parking space
4.5.2. Note that the corporate unit in your department responsible for parking will have to advise the compensation advisor of any subsequent changes.
4.5.3. When the parking rate paid by the employee is less than the fair market rate, the compensation advisor will be able to report the taxable benefit in the RPS .
4.5.4. To report the parking taxable benefit of an employee in the RPS, the compensation advisor will input a Deduction-Commence (DEC/Pay action code (PAC)16) transaction with subsidized parking deduction code 739 or 969.
4.5.5. The monthly amount paid by the employee must be reported in field 66 (Rate/Amount).
4.5.6. If parking is free of charge to the employee, 0.00 must be reported in field 66.
4.5.7. The difference between the fair market rate and the amount paid by the employee must be reported in field 69 (Particulars). This amount represents the taxable benefit. The RPS will tabulate the amount in field 69 over the calendar year and will include the total of the taxable benefit on the employee's tax slips.
4.5.8. The applicable reference code must be reported in field 71 (account coding/contract number).
4.6. Reporting a taxable benefit for employees with an existing payroll deduction for parking
4.6.1. If the compensation advisor is advised of a taxable benefit for an employee who already has a payroll deduction for parking under deduction code 541 or 968, the advisor must stop the current regular parking deduction and commence the deduction with the appropriate subsidized parking code with the relevant reference code.
4.6.2. To report taxable benefits in previous months only of the current calendar year, the pay advisor must create a closed period Deduction-Arrears (DAR/ PAC 17) transaction with 0.00 in field 66, the total of the taxable benefit calculated for the period in field 69, and the appropriate reference code in field 71.
4.7. Reporting a taxable benefit for a previous calendar year (for example for 2010)
4.7.1. The RPS cannot be used; Public Works and Government Services Canada (PWGSC) regional pay offices must amend previous year tax slips to include the parking taxable benefit.
4.7.2. The corporate unit in your department responsible for parking will have to provide the compensation advisor with the information listed in section 4.5.1. for each employee.
4.7.3. The monthly taxable benefit for parking is calculated by subtracting the monthly amount paid by the employee from the fair market rate. For management category employees with subsidized parking, the subsidies have already been reported as taxable benefit. The subsidies must therefore be subtracted from this amount.
The total taxable benefit for that year is determined by adding all the monthly total amounts.
4.7.4. Compensation advisors will provide the following information to the appropriate regional Pay Office (PO):
- Department code
- Paylist (PL)
- Name and initial of the employee
- Personal Record Identifier (PRI)
- Province of work
- Province of residence
- Total amount of parking taxable benefit for the affected year OR
- Additional parking taxable benefit amount to be reported for employees of the management category for the affected year
4.8. Pay Office (PO) Responsibilities
4.8.1 Elements MP718 (additional taxable benefit) should reflect the increased amount of the taxable benefit for parking. Using the information provided by the department, PO agents will credit the year to date (YTD) Master Employee Record (MER) elements MP718.
When the T4 programs run, the system will add the amount in element MP718 that was added manually by the PO agent with the PAC 30 transaction, with the amount in element 700 (gross earnings). The total of these two elements will be included in Box 14 of the T4 and Box A of the Relevé 1.
4.8.2 The amount in previous year element MP706 (YTD CPP earnings) or MP707 (YTD Quebec pension Plan (QPP) earnings), as applicable, should be increased by the amount of the taxable benefit up to the maximum contributory earnings for the affected year. As a reminder and per usual process, if the maximum contributory earnings were not reached, the PO agent must calculate the CPP or QPP premium that must be collected due to the increase in CPP / QPP earnings. This amount will be collected with a PAC 17 C 794 transaction with the notation ''PY CPP / QPP PREM''. If the deduction is done using a lump sum for the amount owing, another PAC 30 must be done in the previous year element MP708 or MP709 to show the premiums paid. If the amount is too significant and is to be recovered over more than one pay period, the PAC 30 to update the MP708 or MP709 element must be done only once the premium has been fully recovered.
4.9. Reporting a taxable benefit with no payroll deductions
4.9.1. If the corporate unit in your department responsible for parking advises the compensation advisor of the total amount of the taxable benefit to be reported for an employee that pays for his parking directly, the compensation advisors will create a Deduction-Commence (DEC/ PAC 16) transaction with subsidized parking deduction code 739 or 969 with 0.00 in field 66, the taxable benefit amount in field 69, and the applicable reference code in field 71.
4.10. Payroll deductions with NO taxable benefit
4.10.1 In situations where the payroll parking deduction is equal to the fair market rate, there is no taxable benefit; therefore, compensation advisors will continue to use the regular parking deductions codes 541 (Parking) and 968 (Parking Quebec).
4.11. Conversion for existing accounts
4.11.1 Because of the new reference codes for subsidized parking, a bulk change was done on November 22, 2010, for all accounts with the deduction codes 739, 839, 969 or 972 to add the taxable benefit reference code 001. A listing of all accounts modified with the bulk change has been sent to clients.
4.11.2 Clients are responsible for ensuring that these accounts are in fact in the management category. If not, clients must report a Deduction-Amend (DEA/PAC 16A) to show the appropriate taxable benefit reference code in field 71.
4.12.1. There is no change to the process for reimbursements for parking.
Updated 4.12.2. When an employee submits a parking receipt for reimbursement and the amount is to be reported as a taxable benefit, the compensation advisor will input an Entitlement-Commence (ENC/PAC 18) transaction with the entitlement code 281.
4.12.3. The payment generated will be included on the employee's tax slips and will have the appropriate taxes, Canada Pension Plan (CPP) and Employment Insurance (EI) contributions taken.
Updated For employees who are disabled as per CRA definition: Disability-related employment benefits, it is not a taxable benefit. The compensation advisor will input an Entitlement-Commence (ENC/PAC 18) transaction with the entitlement code 289.
5.1. Any inquiries on the information regarding the process for entering the parking taxable benefit into the RPS should be addressed to your PWGSC Compensation Services Office. Any inquiries regarding an employee's use of parking and that parking's fair market value must be directed to your own departmental authorities. Finally, any inquiries in respect of parking where PWGSC is not the custodian should be directed to TBS .
Reference(s): CJA 9006-1
- Date modified: