Is Burlington City Hall’s free employee parking a tax risk with the CRA?
Currently, the city (through taxes) pays into the parking reserve fund the equivalent of the parking benefit, based on number of permits in each lot at market value. The city, through taxes, also makes a contribution to the transit fund for the monthly market value of employee passes distributed.
Does free parking for city employees create a risk with the CRA?
Residents are subsidizing city staff parking ($217k) and transit, at a time we are raising parking rates for others, cutting bus service in some areas and contemplating cutting free transit for CNIB, ARC and some students. We need to take care of our residents first, before we take care of ourselves with taxpayers dollars. To put it in perspective, the money spent on parking could fund the bulk of our contribution to the library, or economic development, and half the funding for the Haber recreation centre – direct front line services to residents.
I propose removing the free employee parking benefit, thereby saving $217k from the base budget.
Taxable benefit
The transit benefit is a taxable benefit for employees who receive it, however, the parking benefit is not.
This not only penalizes transit users – an activity we want to encourage – it puts the city – and taxpayers – at risk in my view. A decision in Kitchener in 2010 led to the municipality paying $1.4m in back taxes on behalf of employees for the employee parking benefit, and the municipality ultimately ended the paid employee parking program, saving taxpayers $300k annually.
You can read the article here.
In its decision regarding back taxes owed, Canada Revenue Agency said a parking space supplied by an employer is a taxable perk if the employee does not use their vehicle for work, and if parking has a market value in the same area. Both conditions would be true in Burlington for the majority of city employees.
At minimum, parking should be a taxable employee benefit, to protect taxpayers from picking up the bill for back taxes, as happened in Kitchener, and I will introduce a motion to that effect.
