Before you give a gift there are some things you should consider…
Canada Revenue Agency (CRA) has very specific rules regarding how gifts to employees should be treated. CRA uses terminology such as “cash”, “near-cash”, “non-cash”, “gift”, “award” and “reward”. Each of these categories or types can have different tax and reporting implications.
CRA has explained these in simple terms on their website as well as providing a handy questionnaire which helps determine the taxability for various scenarios. We recommend working through the questionnaire prior to determining the gift you will provide; so you are able to maximize the benefit and minimize tax implications to the employee.
From CRA website:
Rules for gifts and awards
A gift or award that you give an employee is a taxable benefit from employment, whether it is cash, near-cash, or non-cash. A near-cash item is one that can be easily converted to cash such as a gift certificate, gift card, gold nuggets, securities, or stocks.
Cash and near-cash gifts or awards are always a taxable benefit to the employee. We have an administrative policy that exempts non-cash gifts and awards in some cases.
A gift has to be for a special occasion…
Read more at:
https://www.canada.ca/en/revenue-agency/cra-canada.html?utm_campaign=not-applicable&utm_medium=redirect&utm_source=cra-arc.gc.ca_redirecttx/bsnss/tpcs/pyrll/bnfts/gfts/plcy-eng.html
The questionnaire/Q&A can be found at:
https://www.canada.ca/en/revenue-agency/cra-canada.html?utm_campaign=not-applicable&utm_medium=redirect&utm_source=cra-arc.gc.ca_redirecttx/bsnss/tpcs/pyrll/bnfts/gfts/txblbnft/q1-eng.html
Written By: Deborah Boksteyn BSc, GBA, CMS