What is the taxable benefit if an employer rents a property for an employee?

The taxable benefit in the scenario where an employer rents a property for an employee is determined by identifying the greater value between the annual value of the property and the actual rent that the employer pays for it. This approach ensures that the employee is taxed based on the economic benefit derived from the housing arrangement, reflecting either the perceived market value of the benefit or the actual outlay the employer incurs on behalf of the employee.

When assessing the amount, the annual value represents the notional rental value of the property as established for taxing purposes, which could differ from what the employer pays. Therefore, choosing the higher of these two values ensures that the employee's taxable benefit accurately captures the full extent of the economic advantage provided by the employer, encompassing situations where the property might have a higher value than the rent being paid.

This principle reinforces the tax policy that seeks to account for real market benefits rather than just actual payments, ensuring fairness in the taxation system.