Employee Gifts or Awards
Nicole Kries, CA
Generally, the Canada Revenue Agency (CRA) will consider gifts or awards received by an employee from its employer to be a taxable benefit. However, the CRA’s existing policy allows employers to give up to two non-cash gifts and two non-cash awards per employee per year if the total cost of the two gifts or two awards is no more than $500 (including taxes). For this policy to apply, the non-cash gifts need to be given for a special occasion such as a birthday, religious holiday, wedding or birth of a child. The awards should be given for recognition of special employment-related achievements such as long or outstanding service and meeting or exceeding safety standards. Furthermore, the employer will be able to deduct the cost of the gift or award, while the employee will receive it tax-free.
If the cost of the non-cash gift or award exceeds the $500 threshold, the CRA will allow the employer to choose which gift(s) or award(s) are excluded from the employee’s income as long as the total does not exceed the $500 threshold. The fair market value of the remaining gift(s) or award(s) will have to be included in the employee’s income.
CRA’s administrative policy does not apply to cash or near-cash gifts and awards. Accordingly, gift certificates, reward program points, gold coins or any other item that can easily be converted to cash would not fall within the policy, and the value of such awards and gifts will be considered a taxable employment benefit to the employee.
Please contact us if you require additional information concerning the above.
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