Effective January 1, 2022, the Canada Revenue Agency (CRA) has updated its policies on employee gifts and awards in order to address the treatment of gift cards provided to employees.
The CRA’s administrative policy is that you can provide your arm’s length employees with non-cash gifts or awards, and the first $500 per employee per year will be considered non-taxable. This administrative policy applies to non-cash gifts or awards only.
Historically, the CRA has considered gift cards to be considered a cash gift, meaning that they will not be eligible for the $500 non-taxable limit for non-cash gifts and awards, and will be treated as taxable to the recipient.
In late 2022, the CRA changed this policy and announced that effective back to January 1, 2022, it will now consider certain gift cards to be “non-cash” gifts, meaning that they would be eligible for the $500 non-taxable gifts and awards annual limit of $500 per employee provided that certain conditions are met.
Under the CRA's new administrative policy, if you provide your employee with gift cards, the gift card is considered non-cash if all of the following apply:
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It comes with money already on it and can only be used to purchase goods or services from a single retailer or a group of retailers identified on the card
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The terms and conditions of the gift card clearly state that amounts loaded to the card cannot be converted into cash
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A log is kept to record gift card information containing all of the following:
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Name of the employee
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Date the gift card was provided to the employee
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Reason for providing the gift card (part of social event, gift or award)
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Type of gift card
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Amount of the gift card
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Name of the retailer(s)
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For more information on the CRA’s administrative policies for employee gifts and awards, visit https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/payroll/benefits-allowances/gifts-awards-social-events/gifts-awards-long-service-awards.html
For questions about employee gifts and awards and other employee benefits, contact Gregory Harriman & Associates LLP by email at This email address is being protected from spambots. You need JavaScript enabled to view it. or by phone at 1-403-934-3176.
Disclaimer
The information in this publication is current as of January 25, 2023
This publication has been carefully prepared, but it has been written in general terms and should be seen as broad guidance only. The publication cannot be relied upon to cover specific situations and you should not act, or refrain from acting, upon the information contained therein without obtaining specific professional advice. Please contact Gregory, Harriman & Associates LLP to discuss these matters in the context of your particular circumstances. Gregory, Harriman & Associates LLP, its partners, employees and agents do not accept or assume any liability or duty of care for any loss arising from any action taken or not taken by anyone in reliance on the information in this publication or for any decision based on it.