Free or Subsidized Lodging

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Note

If one of your employees works at a special work site or at a remote location, see Employee Working at a Special Work Site or a Remote Location.

If you provide free or subsidized lodging to an employee, the value of the benefit corresponds to the cost of the lodging minus any amount paid by the employee.

As a rule, the cost of the lodging is considered to be the fair market value (FMV) of the rent for the house or other lodging made available to an employee (that is, the amount the employee would have had to pay to rent from someone other than his or her employer).

You have to include the value of the benefit in boxes A and V and in box G or box I of the employee's RL-1 slip (see courtesy translation RL-1-T). See Benefit Provided to an Employee to find out how a benefit in kind should be treated.

GST and QST

If the rent is subject to the goods and services tax (GST) and Québec sales tax (QST), the cost of the lodging must be increased to include these taxes. In general, the supply of a room or other type of lodging occupied by the employee for at least one month is not subject to GST or QST.

Member of the clergy or of a religious order

If you provide free or subsidized lodging to a member of the clergy, a member of a religious order or a regular minister of a religious denomination, and this person is in charge of or ministers to a diocese, parish or congregation, or is engaged exclusively in full-time administrative service by appointment of a religious order or religious denomination, there is a taxable benefit for the person.

You have to include the value of the benefit in boxes A and V of the person's RL-1 slip.

Note

A member of the clergy, a member of a religious order or a regular minister of a religious denomination may be able to claim a deduction for their residence or lodging. To claim the deduction, the person has to enclose form TP-76-V, Residence Deduction for a Member of the Clergy or a Religious Order, with their income tax return. You must complete Part 2 of the form to certify that the person is required to use the residence or lodging in the course of their office or employment.

Source deductions and contributions

A member of the clergy, a member of a religious order or a regular minister of a religious denomination can request a reduction in source deductions of income tax with regard to the deduction for their residence or lodging. The person can request the reduction by completing form TP-1016-V, Application for a Reduction in Source Deductions of Income Tax.

In this way, you do not have to withhold income tax on the value of a taxable benefit (including an allowance) in respect of a residence or lodging provided to such a person, as long as the person gives you the letter they receive from us authorizing the reduction. In this situation, you do not have to withhold or pay Québec Pension Plan (QPP) contributions on the value of the benefit.

You do not have to withhold or pay Québec parental insurance plan (QPIP) premiums on the value of a taxable benefit in respect of free or subsidized lodging provided to a member of a religious order who has taken a vow of poverty and whose remuneration is paid to the religious order, either directly or by the member.

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