Taxable employment benefits — company car, housing, loans
Amounts to be included as income from office or employment
Section 6 expands employment income beyond salary to include the value of most employer-provided benefits: company vehicles, low-interest loans, housing, group life insurance, and more.
Plain-language explanation
Section 6 ensures that non-cash benefits from employment are taxed just like salary. If your employer gives you something of value, it is likely taxable under s.6 — unless a specific exemption applies.
s.6(1)(a) — General benefit rule: The value of any benefit received or enjoyed in respect of employment is included in income. This is a wide provision — CRA's position is that almost any employer-provided benefit triggers an income inclusion unless expressly exempted.
s.6(1)(e) — Automobile standby charge: When an employer makes a vehicle available to you, the standby charge is 2% per month of the vehicle's original cost (or a reduced amount if personal use is ≤50%). This approximates the value of having the car available.
s.6(1)(k) — Operating cost benefit: A per-kilometre benefit for employer-paid operating costs on a personal-use vehicle (in 2026: 33¢/km for most provinces, 37¢/km for the North).
s.6(9) — Low-interest loan benefit: If your employer gives you a loan at less than the CRA prescribed interest rate, the difference between the prescribed rate and the actual rate is a taxable benefit.
Common exemptions: Employer-paid professional development, certain uniform allowances, free parking in a prescribed zone, group benefits plans (health and dental premiums are generally non-taxable), and fitness subsidies up to $500/year at CRA's discretion.
Example
Diane's employer provides her with a car (cost $40,000) available year-round. Annual standby charge: 24% × $40,000 = $9,600. She drives 30,000 km total, 12,000 personal. Operating benefit: $0.33 × 12,000 = $3,960. Total T4 benefit: $13,560.
Amendment history
Significant changes to this provision. Older versions help you understand rules that applied in prior tax years.
CRA introduced a temporary COVID-19 accommodation for the automobile standby charge calculation — employees who were unable to use their employer vehicle in 2020/2021 due to COVID could request a reduction in the standby charge for those years.
Before
Standby charge applied regardless of personal use if vehicle was available
After
COVID relief: reduced standby charge available where vehicle was unavailable due to lockdowns
Common questions
Is my employer's health and dental plan taxable? +
Usually no. Employer contributions to a registered group health or dental plan are generally not a taxable benefit to employees. However, employer-paid premiums for provincial health insurance in Quebec are taxable.
My employer gave me a $10,000 interest-free loan. Do I pay tax on it? +
Yes. The "loan benefit" is calculated as the CRA prescribed rate multiplied by the outstanding balance. In 2026 the prescribed rate is 4%. The benefit for the year is $10,000 × 4% = $400, included in your T4 income.
What is the automobile operating cost benefit rate? +
In 2026, it is 33 cents per personal-use kilometre (37¢/km in the Northwest Territories, Nunavut, and Yukon). If the employer paid all operating costs and your personal use exceeded 50%, you must use the per-kilometre method. Below 50% personal, you can elect to use half the standby charge instead.
Key terms
Related sections
Source: Income Tax Act, RSC 1985, c. 1 (5th Supp.), section 6. — Read the official text on Justice Canada
These summaries are for educational purposes only and do not constitute legal or tax advice. Speak with a CPA for advice on your specific situation.