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TAXATION OF MUNICIPAL ALLOWANCES CHANGING IN 2019

Another change announced in prior years will become effective in 2019.

As of January 1, 2019, non-accountable allowances paid to elected members of legislative assemblies, certain municipal officers, and certain other individuals will be fully included in income. Allowances are considered to be non-accountable if the employee did not have to submit receipts in order to receive the allowance.

Currently, if the allowance is less than 1/2 of the income received from the above individual’s salary and other remuneration, the allowance is not included in income. As of January 1, the full amount of the allowance will be included in Box 14, and will be subject to income tax and Canada Pension Plan deductions. However, because amounts paid to elected or appointed officials are not subject to Employment Insurance, no Employment Insurance premiums will be deducted.

If eligible, the expenses can still qualify as employment expenses and be deducted on the personal income tax return. The taxpayer will have to meet the same requirements as other employees in order to qualify for the deduction.