When parking isn't "free"

National Post

2012-03-10


As a child and avid Monopoly player, I would always look forward to landing on the "free parking" spot, where I would collect the growing pile of cash sitting in the middle of the board. But one Saturday afternoon, my friend Michael informed us, much to our horror, that according to the "official" rules, which he had actually read, "a player landing on this place does not receive any money, property or reward of any kind. This is just a 'free' resting place."

Enjoying the perk of free parking at your place of employment may also be a thing of the past as the taxman takes an equally dim view of this common employment benefit. The Canada Revenue Agency's position is that employer-provided parking is generally a taxable employment benefit. The amount of the benefit is equal to the fair market value of the parking less any amount you pay to use the space.

Last month, the CRA was asked about a specific situation and whether the parking provided by an employer would result in a taxable benefit to the employee. The situation related to a form of "scramble parking" in which there were over 30% more parking passes than available stalls and no stalls were assigned.

The CRA deems scramble parking to exist where there are "significantly fewer spaces than there are employees who want parking and the spaces are only available on a first-come, first-served basis." While the CRA believes this indeed constitutes an employment benefit, since the value of such free parking to any particular employee is difficult to determine, administratively the CRA does not require such a benefit to be reported and therefore it is effectively tax-free.

While the CRA doesn't maintain formal guidelines on whether or not scramble parking exists, it provided some possible considerations, which include: how many employees actually use the parking at any given time, whether the parking lot is full at various times during the day, whether, on an average day, there are employees who don't get spots or whether most, if not all, employees end up with spots.

In the current situation, the CRA could not conclude definitively that non-taxable scramble parking exists merely because there were 30% more passes than available stalls. The real issue is whether an employee is actually likely to get a spot on a given day, rather than whether theoretically, if every employee who had a pass arrived at the same time, there wouldn't be enough spaces for them all to park.

Ultimately, it's up to your employer to determine whether the criteria for scramble parking are met and if not, to report such benefit on your T4 Slip.

If you disagree with how your employer has treated your parking (or any other taxable benefit, for that matter), you can request an "Employee Complaint Registration Form" from the CRA, which you would complete and return to your tax centre to have your taxable benefit reviewed.