Employee Relocation Benefits: What Canadian Employers Need to Know

When you transfer or reassign an employee, the amount you pay for that move isn’t a taxable benefit. Did you know that? Most employees would be more than happy to have the help. Here’s how you can both benefit.

Identify Where You Can Help Your Employee

There are many ways in which you can help your employee move, and some of the money you give to him or her won’t count as a taxable benefit. For example, if you directly pay for or reimburse your employee for the cost of a house hunting trip, including all child care expenses or pet sitting fees, the employee isn’t taxed on this benefit.

Travelling costs are also exempt from taxation, as are the costs incurred for transporting or storing household items while moving. The costs to move personal items like cars and boats are also exempt. When employees sell their old residence, they incur fees. But, if you reimburse those, your employee won’t have to pay tax on the income used to pay them.

Charges to connect and install utilities and appliances, fixtures, and anything similar that existed at the old residence are exempt as is any legal fees and land transfer tax.

You can also cover charges for long-distance calls related to buying the new home and many other costs like automobile license fees, inspections for the new home, and drivers’ permit fees.

Offer a Loan

You could also offer the employee a loan. It might seem unusual, forward even. But, many businesses are helping their employees out with a small cash loan to help buy a new place. If you work with a good New Home Listing Service, you might be able to score a great deal on a home with your employee too, making the employer/employee partnership very valuable.

To benefit, the employee or the employee’s spouse or common-law partner must move and start work at a new location in Canada. The employee must also use the loan to buy a new home. That home must be at least 40 Km closer to work than the old home, and the loan must be given because of the employee’s employment.

Finally, the employee must designate the loan as a home-relocation loan. As long as these conditions are met (and they’re easy to meet), you could become one of your employees best (and most favourite) benefactor.

Identify Where You Can’t Help

While there are many ways in which you can help, there are a few areas where you can’t. For example, if you pay or reimburse moving costs that aren’t listed on Revenue Canada’s website, you won’t be able to pass that benefit on to the employee. It will be a sunk cost, so to speak.

If you only claim part of an employee’s expenses, he or she may be able to claim part of the expense when filing his or her income tax and benefit return. And, any GST/HST also applies to the the value of the benefit.

Christopher Murphy provides relocation support with a multinational company. He understands all aspects of the process and is pleased to share his insights online. His thoughts on this subject can be found on a number of different websites.