News Category: CRA Updates

17
Oct

GIFTS TO EMPLOYEES

A frequently asked question is “How much and how can I pay additional amounts to employees without them having to pay tax on it?”

The Tax Departments policy is that up to $500 per year, per employee can be paid to an employee as a gift or award but the amount cannot be in the way of cash or near cash.

As an example, purchasing a $500 electronics item for an employee would be non-taxable, but if you purchased a $500 gift card at an electronics store it would be considered taxable because a gift card is considered near cash.

Simple solution is to have the employee identify what it is they want and then have the company purchase the item on behalf of the employee as a gift, but make sure not to have the employee purchase and then be reimbursed, because the reimbursement would be considered cash.

To work within the Tax Department guidelines is a little bit more of a hassle, but will be greatly appreciated by your employees at the same cost to you.

If you need clarification, please contact us to discuss.


Gregory & Associates