Beyond the pay stub: Tips for managing the administration of employee ‘fringe’ benefits

On an annual basis, the Canadian Society of Association Executives (CSAE) releases its Benefits and Compensation Report to monitor trends across different sectors, including:

• industry/trade associations
• professional associations
• charities
• regulatory authorities

While their 2024 report offers a variety of insights for organizations to consider as it relates to offering fringe benefits such as automobiles, cell phones, and membership dues, CSAE does not go into detail on the administrative impacts of these benefits. Keeping that in mind, here are some emerging, or re-emerging, fringe benefits with considerations for how they can impact finance and administration professionals.

Type of Benefit - Automobiles

Automobile benefits, such as vehicle allowances or access to a company vehicle, are most commonly offered to CEOs and other high-level executives.

Considerations for Administration

The following guidelines from the Canada Revenue Agency (CRA) will be important to review when offering access to a company vehicle:

• Automobile vs motor vehicle: Determine if the vehicle is defined as an ‘automobile’ or ‘motor vehicle’ (yes, there is a difference). You can do this using CRA’s ‘vehicle validator’ and following the prescribed steps.
• Business use vs personal use: Confirm whether the vehicle is for business use only or business and personal use. This difference determines whether it is considered a taxable benefit for the employee. If there is no personal use, it is typically not considered a taxable benefit.

Other vehicle-related benefits include:

• Mileage rates: Re-visit rates to ensure consistency and transparency across your organization. Rates can vary widely (anywhere from 25 cents to 70 cents per kilometre, according to CSAE), but CRA offers annual mileage rates, noting that these rates have increased by 11 cents per kilometre between 2021 and 2024.
• Parking: This is the most common benefit offered across all employment levels and employees will often inquire as to whether it is a taxable benefit. Parking provided or reimbursed to employees is typically taxable, including parking received at a reduced cost compared to fair market value.

Type of Benefit – Cell Phones

Cell phones are often provided for business and personal use.

Considerations for Administration

• Understand your organizational policy: Different organizations may adopt different policies as it relates to cell phones. This may include:

- Company-owned, business only
- Company-owned, personally enabled
- Bring your own device

• Each policy requires a different level of oversight and reimbursement so this should be made clear to employees to ensure there aren’t any misunderstandings. If the employee is allowed to decide whether to use a personal or company cell phone, you should be prepared to outline the pros and cons to allow them to make the best decision for themselves.
• Track the replacement period: Track the phone plan replacement periods (e.g., every two years) to make sure employees receive new models when eligible. Providers are not always forthright with this information and it’s better to replace phones proactively rather than when employees run into problems. Plus, receiving a new phone can be a boost to employee morale.
• Understand costs when travelling: Communicate any important information to employees when travelling to ensure unexpected costs don’t arise. Be proactive by reviewing the plans to see if they include a flat daily fee when employees travel (regardless of use). If employees are responsible for certain actions, like keeping phones on airplane mode during personal travel, this needs to be made clear or you may risk reimbursing high roaming fees when they return.

Type of Benefit - Membership Dues

Professional membership dues may be reimbursed by employers, including payroll, accounting, or human resource designations.

Considerations for Administration

• Understand non-taxable situations: According to the CRA, professional memberships are not taxable when membership with an association or organization is a condition of employment, or if not a condition of employment, if the employer determines that they are the primary beneficiary of the membership.
• Make sure employees check with their managers first: Many employees may be keen to have their professional dues covered. Remind them to check with their managers first to determine if the organization covers them. Most organizations will not cover these costs if employees have a designation that isn’t required or relevant to their position.

Integrating fringe benefits can be an effective strategy to improve employee retention, but the administration of these benefits can be challenging. While employees may be excited about the prospect of driving a company car or receiving a new cell phone, it is crucial to stay on top of the trends, and legal requirements, to make sure that consistent processes are followed and communicated, including keeping employees informed of how these benefits are handled when tax season comes around. Otherwise, these benefits, which are intended to incentivize employees, will become a headache for the finance and administration staff who manage them.

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