Land on free parking, expect to pay

October 1, 2013 Michele Glassford Employee Relations, HR Policies and Procedures, HRMS, Human Resources, Payroll, Pensions and Benefits, Wages and Compensation

In Monopoly, landing on free parking is simply a safe place to land. Many people, however, play under rules which allow anyone landing on free parking to collect the “pot” in the middle of the board. Ca-ching! Free parking at the workplace, however, is rarely a windfall, nor ever really free, yet the cost and value of parking is usually underestimated or overlooked by both employers and employees.

Statistics Canada’s 2011 Household Survey data shows that 74 percent of the employed labour force drives itself to work, with only 12 percent taking public transit. Even in large cities such as Ottawa and Toronto, with sophisticated public transit systems, a large majority of employees still drive themselves to work, making the availability and cost of parking a serious issue for employees, and by default, for employers. As a result, employers who provide parking (free or otherwise), or provide subsidy for employees’ private parking arrangements, should implement a carefully considered parking policy.

Costs of parking

Employers who provide parking for employees at its own premises have many costs associated with it including:

the costs of purchasing, financing or leasing space in excess of that required to run the business;
maintenance, upkeep;
snow and ice removal;
lighting and security;
expansion of the employer’s “premises” for the purposes of Occupational Health and Safety Act and Workers’ Compensation and the increased risk that an accident or injury may arise out of employment (often with very limited control in the hands of the employer to prevent it);
general lost opportunity costs of land use for parking.

Employers who pay for or subsidize employee parking off premises also have the obvious costs of providing such a benefit and must also consider the indirect impact of such benefits on employees who do not drive. Do employers offer those employees an equivalent benefit?

Taxation of parking

Employees have costs associated with parking as well, even if “free”, as Canada Revenue Agency considers most free or subsidized employee parking to be a taxable benefit. Canada Revenue Agency’s “Employers’ Guide — Taxable Benefits and Allowances” states that

employer-provided parking is usually a taxable benefit for an employee, whether or not the employer owns the lot. The amount of the benefit is based on the fair market value of the parking, minus any payment the employee makes to use the space.”

Exceptions to the taxable benefit include parking that is available to both employees and other people, such as in a shopping centre or plaza, or where an employer provides “scramble parking”, ie. where there are insufficient spaces for those employees who need them , and spaces are allocated on a first-come, first-served basis. Also excluded from taxable benefit status is parking provided to employees who need to drive for business purposes (does not include travel between work and home) and who either regularly drive their own vehicles or vehicles supplied by the employer. Also generally excluded is parking provided to employees with disabilities.

As always, protect yourself

So before an employer offers its employees any assistance with parking, it should ensure it has a policy outlining at minimum: the availability of parking, how limited spaces will be allocated, the cost or subsidy associated with the parking, general safety rules for parking lots, and clearly stating whether the parking is a taxable benefit to ensure that there are no surprises at tax time.

Consult the First Reference’s Human Resources PolicyPro® for a discussion of this issue and a sample parking policy tailored to each Canadian jurisdiction (Alberta, British Columbia, Manitoba & Saskatchewan, Ontario, Atlantic and Quebec Editions).

Michele Glassford
Editor of Human Resources PolicyPro
published by First Reference Inc

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Michele Glassford

President and Managing Editor at DRH and Lawyer at MacKinnon Law Associates

Michele Glassford, is a lawyer, researcher and policy analyst with a background in employment and labour law.In addition to a part-time law practice in Stoney Creek, Ontario, Michele has worked in the field of labour adjustment for the Health Sector Training and Adjustment Program and has been a Researcher for the Canadian Broadcasting Corporation. Michele also holds the position of President and Managing Editor at D.R. Hancocks & Associates Inc., author of the Human Resources PolicyPros. Read more