Obtaining your designation as a Chartered Professional Accountant (CPA) is an important step in your accounting career. If you’re already working with an accounting firm, both you and your company stand to benefit when you get your CPA designation.
Why Should Your Employer Pay for Your CPA Certification?
An employer can benefit from covering an employee’s CPA certification. Your CPA certification serves as proof of your skill. Your employer can trust you to do your job in a way that meets the company’s needs. Additionally, your decision to gain or renew your CPA designation shows that you’re motivated to do a good job and maintain a relevant knowledge base.
From a financial standpoint, tuition fees represent a significant tax deduction. Paying tuition could reduce an employer’s annual tax owing or could result in a tax refund. If the company can afford the up-front costs, paying your tuition could benefit to your employer at tax time.
Having your company pay for your CPA designation means you can’t claim the tuitions amount on your own taxes. Even though you’d lose that potential deduction, it helps you avoid a significant up-front cost and potential long-term debt.
Tuition Deductions for Business
According to the Canada Revenue Agency, tuition fees paid by a business to an employee are a non-taxable benefit, as long as the employee’s education is directly related to the job and benefits the company in the long term. In this case, the employer can claim the full amount of any tuition fees it covers as a business expense.
If you work for an accounting firm, a CPA designation is certainly eligible as a deduction for your employer. This is also the case if you work for a different type of company as an in-house accountant. On the other hand, if you’re a self-employed accountant doing contract work for a company, the company has less incentive to pay your tuition because there’s no guarantee that you’re going to continue to work for the company on a long-term basis, and therefore, no guarantee that your certification directly benefits that company.
Courses and Renewals
The initial CPA certification process involves a taking courses and can cost upwards of $20,000, depending on your provincial program. If you’re taking a full CPA course load, you may have to take some time off from your job.
As long as you agree to return to work with the same company once you’re finished your program, the business can still cover your tuition as an expense. Your employer will likely require a written agreement to prove to the CRA that you’ll be returning. The company can also opt to cover textbook fees, meals, and some living expenses as long as you have proof that they’re related to your education.
To renew a CPA licence or continue your membership to a CPA licencing body, you might have to pay an annual membership fee. While this type of fee doesn’t fall under the umbrella of tuition, your company should still be able to claim it as a business expense because your continued status as a certified CPA is directly beneficial to the business.
If you’re considering taking a CPA certification program or course, talk with your employer about your options for education coverage. Weigh the cost of losing a deductible on your own taxes with the potential for savings. Both full and partial education coverage amounts can be eligible for deductions.