Did You Know
That CRA has a policy to allow unlimited non-cash tax-free gifts orawards to an employee each year where the total amount of the gifts or awards does not exceed $500 including taxes? The amount of the gift or award will qualify as a business deduction to the employer.
There are some guidelines CRA has set out HERE.
Note that gift certificates are considered taxable because CRA considers them to be near-cash. All near-cash gifts or awards will be taxable. Examples include gold, stocks, jewels, etc. As well, the policy may not apply to gifts or awards given to closely-held corporations to their shareholders or relatives. In these cases, CRA considers the gifts or awards to be received as shareholders not employees.
This CRA policy does not include special Long-Service Awards discussed HERE. Under that policy once every five years, give your employee a non-cash long-service or anniversary award valued at $500 or less, tax free. The award must be for a minimum of five years' service, and it has to be at least five years since you gave the employee the last long-service or anniversary award. Any amount over the $500 is a taxable benefit.
Careful planning with a Chartered Professional Accountant is warranted. Contact Keith Anderson, BCom, CPA, CA-IT, CITP at (780) 447-5830 if you need advice.