Canadian Tax Information

Let’s start with an overview:

Non-taxable benefits – Most expenses you can claim under the Relocation Directive are non-taxable. If you claim $1,000 for an eligible expense, you are reimbursed $1,000. There are no income taxes that apply.

Taxable benefits – Although most benefits are non-taxable, some benefits are taxable. Taxable benefits are categorized as Cash Taxable Benefits or Non-Cash Taxable Benefits.

Cash Taxable Benefits - Home Equity Assistance (HEA) and Real Estate Incentive (REI)

Claims for Cash taxable benefits are reconciled by CRSP and transferred to DRBM for immediate payment processing. Approved amount is entered into CCPS/RPSR and member will receive the after-tax portion on their pay. DRBM sends an email to advise each affected member upon processing the transaction in CCPS/RPSR. Any question regarding how these transactions will impact your pay should be directed to your pay office as the amount of tax payable is calculated by the pay system.

Non-cash Taxable Benefits

A non-cash taxable benefit includes a payment made to a third party for a particular good or service that a member was entitled to under the CAF Relocation Directive. Claims for Non-Cash taxable benefits are reconciled by CRSP and paid out by CRSP.

Approved amount is then entered into the CCPS/RPSR fringe benefit screen by DRBM and the applicable source deductions (taxes) on the approved amount will be removed from members pay.

DRBM sends an email to advise each affected member upon processing the Non-Cash transaction in CCPS/RPSR. Any question regarding how these transactions will impact your pay should be directed to your pay office as the amount of tax payable is calculated by the pay system.

A list of Non-Cash Taxable Benefits can be found in the link below.

Tax-deductible benefits – At times during your move, you may incur an expense which is not reimbursable within the CAF relocation directive. For tax purposes, these expenses may still be considered an eligible moving expense according to the Canada Revenue Agency (CRA) and be claimable on your income tax as a deduction. Please refer to the CRA website for more information on eligible tax deductions.

Tip #1 – Think before you submit. Before submitting your claim, we recommend that you verify the tax treatment of a benefit. In some cases, the Custom and Personalized envelopes set limits for various benefits. While your first impulse might be to immediately claim a large expense, it might be better financially to claim other expenses first if they are non-taxable. Your immediate reimbursement would be the same either way, but having to pay taxes later on a taxable benefit could be a surprise. Your Move Profile refers you to a breakdown of each potential benefit’s tax implications.

Tip #2 – Keep your receipts and records. During your move, you might incur expenses that are not eligible for reimbursement at all under the Relocation Directive, or that exceed the available funds for that benefit. If these expenses are considered “eligible moving expenses” by the Canada Revenue Agency, you can deduct them from your employment income on your tax return. Check the CRA website for more information and applicable forms.

Tip #3 – Track your situation. Your Move Profile allows you to track your finances as you progress through your move, allowing you to keep track of the taxable benefits you have received to date and to prepare accordingly for tax time the following year. CRSP identifies taxable benefits to the CAF as they are approved. The CAF will then immediately process cash benefits through your pay ensuring applicable taxes deducted at source. Non-cash benefits will be entered in your pay account as fringe benefits and the applicable source deduction will be removed from your pay balance. All Cash and Non-Cash relocation benefits associated with your move will be included in your regular pay T4/RL-1. If you have an issue with your T4, contact the CAF to ask questions or have any adjustments made.

Finally, tax laws and regulations can and do change, and your CRSP Agent is not a tax specialist. We recommend you consult an independent and professional financial planner to help with your strategy and financial planning. This document is just a guide and provides only general tips, not tax advice.

We expect you have more questions. Your Knowledge Centre on Your Move Profile is an invaluable tool for other relocation information and guidance: other VIPs, fact sheets, and FAQs. The CRA website has information you’ll need on tax implications. Take the time to review all the information available so you can minimize the taxes that you have to pay and maximize the after-tax benefits that you are eligible for.

You can find the complete list of Taxable Benefits below:

Taxable Benefits List

NOTE:
If you receive taxable benefits, you will be required to pay taxes as though it were part of your income, taxed at your marginal rate.

The taxable amount for HEA and capital improvements benefits received will be 50% of the amount in excess of $15,000.

For example:

Total HEA and capital improvements amount = $20,000.00
Taxable amount will be $2,500 formula being ($20,000 - $15,000) * 50%