![]() ![]() This is the gradual charging to expense of the cost of an intangible asset (such as a purchased patent) over the useful life of the asset.ĭepreciation. Here are several examples of fixed costs:Īmortization. Conversely, a business with low fixed costs can continue to operate profitably even when its sales are low. It is of some importance to understand the extent and nature of the fixed costs in a business, since a high fixed-cost level requires a business to maintain a high revenue level in order to avoid generating losses. This type of cost tends to instead be associated with a period of time, such as a rent payment in exchange for a month of occupancy, or a salary payment in exchange for two weeks of services by an employee. GST/HST may need to be included in the value of the taxable benefit for income tax purposes.A fixed cost is a cost that does not change over the short-term, even if a business experiences changes in its sales volume or other activity levels. This is the price that can be obtained in an open market between two individuals dealing at arm's length.The value of a benefit is generally its fair market value (FMV).whether the individual is the primary beneficiary of the benefit.whether the employee or officer receives an economic advantage that can be measured in money.Whether or not a benefit is taxable depends on: If a step does not apply to you, skip it and go on to the next step. An "employee" includes an individual who holds an office, unless otherwise noted. If you provide benefits to your employees, you always have to go through the same steps. Learn more: Gifts, awards, and long-service awards Steps to follow to determine if you provide benefits to your employees Under the CRA administrative policy for gifts, awards, and long-service awards, gift cards that meet all of the conditions may be considered non-cash. ![]() This includes a payment you make to a third party for the particular good or service if you are responsible for the expense. What are cash, near-cash, and non-cash benefits CashĪ non-cash (or "in kind") benefit is the actual good, service, or property that you give to your employee. The employee has to keep proper records (detailed receipts) to support the expenses and give them to you. ReimbursementĪ reimbursement is an amount you pay to your employee to repay expenses they incurred while carrying out the duties of employment. used as the employee chooses, since the employee does not provide receiptsĪn allowance can be calculated based on distance, time or something else, such as a motor vehicle allowance using the distance driven or a meal allowance using the type and number of meals per day.usually an arbitrary amount that is predetermined without using the actual cost.AllowanceĪn allowance or an advance is any periodic or lump-sum amount that you pay to your employee on top of salary or wages, to help the employee pay for certain anticipated expenses without having them support the expenses. A benefit includes an allowance or a reimbursement of an employee's personal expense. ![]()
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