This year the CRA has identified that gift cards may in fact be a ‘non-cash’, therefore non-taxable, gift to employees, if it meets the following conditions: Historically, gift cards were considered a ‘near-cash’ gift and were always taxable to the employee. Gift CardsĬanada Revenue Agency has recently updated its administrative position on gift cards. Non-taxable gifts do not need to be included on the employee’s T4. Items of minimal value, such as cups, mugs, or t-shirts, are not taxable and should not be included in the calculation of ‘non-cash’ gifts. Amounts exceeding $500 are taxable to the employee and are subject to income tax and CPP premium withholdings. If the total value of ‘non-cash’ items gifted to an individual employee during the year is less than $500, the gifts are non-taxable to the employee. Essentially, ‘non-cash’ gifts are redeemable for specific items or events with no option for the employee to choose the item/event or exchange it for money. ‘Non-cash’ gifts include items such as tickets to an event or a gift basket. Taxable gifts must be included on the employee’s T4. ‘Near-cash’ gifts are also taxable to the employee but are only subject to income tax and CPP premium withholdings. ‘Near-cash’ gifts include items such as prepaid credit cards, or easily convertible property such as securities or cryptocurrency. Cash gifts are always taxable to the employee and are subject to income tax, CPP, and EI premium withholdings. Taxable:Ĭash gifts are simply cash or cheques. *Only if the amount is taxable based on the ‘non-cash’ gift rules explained below. Withholdings Required - income tax and CPP (No EI).Sometimes taxable to the employee (T4 Slip).Withholdings required – income tax and CPP (No EI).Requires withholdings – income tax, CPP, and EI.Summary of Tax Implications of Employee Gifts ![]() Does it meet the definition of ‘gift’ as outlined by the CRA?Ī gift to an employee, by CRA’s standards, is given in connection with a special occasion (religious holiday, birthday, wedding, etc.) and is not related to their employment or job performance.ĬRA has identified 3 categories of gifts:.The tax implications of the gift depend on a few factors: Employees are not equivalent to contractors, for whom you may not withhold taxes. Employees are generally paid via salary and receive a T4 at the end of the year. When it comes to gifts provided to employees, the CRA has clear guidelines regarding what is, and more-importantly, what is not taxable.Īn employee is an individual who is paid directly by you/your corporation, with tax withheld, in return for work completed. While these gifts are generous gestures, they may result in unexpected tax implications. As the holiday season approaches, it is not unusual for doctors to provide gifts to their employees, hospital administrative staff, colleagues, and nurses.
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