Employers Can Provide Staff With Free Computers -- If They Follow The Rules
As a business owner, you are constantly struggling to both attract and retain key talent. One way to do so is to ensure that your employees have access to the latest computer literacy skills available. But could such a training course, offered by an employer, possibly be considered a taxable benefit from employment?
The Canada Revenue Agency's general position is that employer-paid training costs don't result in a taxable employment benefit to employees where the primary beneficiary of the training is the employer.
Recently, though, the CRA was asked whether the cost of a one-day voluntary introductory computer laptop training program would constitute a taxable employment benefit if the participants were allowed to keep a laptop computer at the end of the training session. The purpose of the program was to develop the participating employees' computer literacy skills by providing introductory level training on how to use a variety of software packages, including PowerPoint, Word and Excel.
In the past, the CRA has considered various employer programs in which employees have been provided with personal computers, printers, software and Internet access "for the purpose of developing their employees' computer and Internet skills." While the CRA would not specifically guarantee that this employer's "free-laptop" training was not a taxable benefit, it outlined a series of common characteristics of training programs that, previously, did not give rise to taxable benefits.
Common features of non-taxable programs include ones in which the employers thought that it was critical for their future success that all employees become computer literate as soon as possible and who felt that the most efficient and effective way to develop their employees' computer and Internet skills was to provide them with computers for use in their homes.
There were other conditions. The computer training programs had to be available to all employees. The employers had to either originally own or lease the computers. And the participating employees could neither transfer nor sell the computers for a set period of time. Employees who did not participate in the training were not entitled to any compensation in lieu of their participation.
So, if you're a business owner thinking of introducing a similar training program for your employees, you'd best adhere to the CRA program's general guidelines. You don't want your employees to end up with a costly benefit the next time tax season rolls around.