Things to Know about Your Employment Benefits

In a recent business class, I learned some interesting things about employment benefits, which I hadn’t ever really considered.

This may be just me, and perhaps because my experiences with having real, permanent employment outside of retail is limited, these things I, or my classmates, honestly didn’t know.

Company Vehicles are Taxable Benefits

Ahh! This ones pretty scary. If your employer gives you a company vehicle to drive, that is treated by the Canadian government like an increase to your base salary, and depreciated over the course of the vehicles expected life.

For example, say your base pay is $30,000/year, and that you are taxed about 15% of your income for taxes.

Then, your employer hands over the keys to a nice new truck, valued at $40,000, which will last over 10 years. This means that in year one, this bumps your taxable income up to $34,000, meaning this can bump you up into the next tax bracket.

This is definitely something to be wary of if your company offers the use of a vehicle.

If the company reimburses gas and insurance on your own vehicle, however, this is not treated the same way and therefore will likely be a better deal for you.

You can Opt out of your Health Benefits

This isn’t something I’d recommend doing unless a spouse, parent, or partner has good benefits which you can be on.

If this is the case, or you don’t feel like you need health benefits (which are usually only particularly good in Canada for dental work), you can typically waive your benefits and take the portion of cash that is allocated instead.

The place that I’m interning for actually gives 4% of base pay in lieu of benefits should an employee choose to opt out. Opting out will ensure that your income from the “in lieu” pay is taxed, so watch out!

For instance, my school offers basic benefits, so if I got a job with benefits, I would opt out of them, paying only my $160 school benefits premium.

If I made $30,000 per year, I’d receive the 4& in lieu from my employer, adding an extra $1200 on my pay.

Company Pension Plans are Optional

Well, this I knew. So many people just jump on board with company pension plans without really looking at whether they are defined contribution plans, defined benefit plans, or reading the stipulations.

For example, one student in my class mentioned that she worked for a company which would only pay out the employers portion of the companies pension plan to employees who have been there for more than 10 years. She had a friend that was miserable in his job after three years, and wanted to leave. If he had left, he’d be giving up all of the employer contributions into his pension plan – this could be up to 100% of the employee’s contributions.

Make sure to read the stipulations on any pension plan or any sort of fringe benefit before automatically paying into it.