![]() ![]() Shoppers expect to place an order, obtain free shipping, and receive that order in about two days.įortunately for merchants, the USPS is a leader in flat-rate shipping services. Most online stores now offer free shipping - thank Amazon, L.L. Moreover, free and fast ecommerce delivery is ubiquitous. A business must pay shipping and carrier fees, buy packing materials, and hire labor to pick and pack each order. Shipping can be a significant challenge for ecommerce merchants. For out-of-town trips, the employer may pay a per-kilometre allowance.For more than 20 years, the United States Postal Service has offered flat-rate boxes and envelopes that have helped online stores reduce shipping costs while improving shoppers’ buying experience. For example, an employer may pay a flat rate allowance for driving within the city where the business is based. Employers may choose to combine flat rate and per-kilometre allowance. A flat rate allowance is a taxable benefit. Reasonable rates are determined according to mileage. A flat rate allowance must be reported since it is not reasonable. Employee records are used to support claims with regard to rate and personal versus business driving. That amount need not be reported on a T4 slip. ![]() Reasonable allowancesĪn allowance paid for business driving according to prescribed rates is considered part of an employee's income. ![]() If considerably higher or lower rates are paid to the employee, employers must provide justification. When there are written restrictions on personal use, and the vehicle is specifically designed for and suited to the work, and is essential for work duties, a cents-per-kilometre basis is used according to Income Tax Regulation 7305.1Īs with employer-provided automobiles, motor vehicle benefits that exceed reasonable rates must be reported on T4 slips.When there are restrictions on personal use, and the vehicle is essential for performing the work, a cents-per-kilometre basis is used according to Income Tax Regulation 7306.The three main methods and criteria for vehicles not defined as automobiles are: Calculating benefits for motor vehicles that are not automobilesĭifferent types of motor vehicles are subject to different ways of calculating benefits. Records must be available to prove that the employee paid a third party. If an employee pays a third party for operating expenses such as fuel or repairs (with GST/HST and PST), then the operating expense benefit is reduced. In the case of partial reimbursement, the net benefit is reported on the T4 slip. If an employee reimburses the standby charge, including GST/HST and PST, then there's no taxable benefit to report. This holds true whether a per-kilometre, flat rate, or combined allowance is used. Employers must determine income tax, Canada Pension Plan, and Employment Insurance on the allowance as it is paid throughout the year. Regardless of the type of vehicle, a benefit of an amount that exceeds a reasonable allowance is subject to taxation. For other motor vehicles, benefits are calculated differently. You can calculate automobile benefits by using the standby charge and operating expenses. The type of vehicle you use can help determine the CRA taxes, deductions and insurance. ![]() Here's a list of the how the CRA Automobile Allowance Rate has changed over time. How have the automobile allowance rates changed over time? ![]()
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