CRA Gift Tax Rules for Employers: What You Need to Know

July 13, 2022 | Written by: Hassan Iqbal

CRA Gift Tax Rules for Employers: What You Need to Know

Do you know what the CRA gifts tax rules are for employers? If not, you need to read this blog post! We will discuss the basics of the CRA gift tax rules and how they apply to employers. Plus, we will give you tips on how to comply with these rules.

When an employee receives a gift or award from their employer, it is considered income. The CRA has issued guidelines that exempt certain gifts and awards to employees, which may result in lower tax liabilities for the recipient and increased morale amongst those receiving these gift rewards!

While cash and near-cash gifts given to employees will always be a taxable benefit, employers need only answer some questions from the CRA to confirm whether or not they’re giving out too much tax-free money.

What does near-cash gift?

Near-cash is a term that has the same functionality as cash. For example, it’s taxable because Near Cash operates the same way as your typical dollar bill does! They can include gift cards, certificates or other items easily convertible into cold hard coins and not just some kind of digital currency like Bitcoin.

What is non-cash gift?

You could consider the ticket a non-cash gift because no strings are attached. If the employer gives his employee tickets to see specific events on certain dates and times, these would not typically qualify as cash payments by the recipient since they have no say in when or where these things happen!

Giving Gifts to Employees

The Canada Revenue Agency (CRA) allows employers to give gifts which are non-taxable as long as the occasion is a special one, like holidays or birthdays, etc. However, CRA does not restrict what can be given away at work. Business owners also have options when it comes time for gift-giving between their staff members – there’s no need to buy expensive items and put them into use too!

An employer’s giving of an employee’s birthday gift can be written off as a business expense, but if they did the same with cash, it would have been taxable. The value will depend on how much time and effort went into preparing for this occasion which is typically not worth recording in your accounting records unless there are other items given at different times throughout the year that may require reported income from your employee compared against what they received previously – like when their paychecks come back after being sent out electronically every two weeks or monthly via direct deposit three days later than normal check date due solely because we want our staff happy!

Exemptions by CRA for Giving Gifts:

The Canadian Revenue Agency (CRA) has exceptions for accepting certain non-cash gifts in any year it includes:

  1. Up to $500 worth of items, with the maximum, limited only by how much you’re willing to give!
  2. The employees have been with the company for so long and deserve some recognition. They can receive discounted prices on gifts, which will always be under $500 a piece!
  3. Many employers organize parties and other social events for their employees. For example, many businesses host an annual holiday party at $100 per person or less so that they can save money by not having a sitter who costs them more than what’s being spent on food and drinks at one of these gatherings!
  4. The employer is responsible for providing food and drink at any work-related event. Which could be a meal or just some tea from time to time.

Final Words

In conclusion, employers’ CRA gift tax rules are not as complicated as they may seem. As long as you are aware of the guidelines and exemptions. You can give gifts to your employees without having to worry about any tax implications. That said, it is always a good idea to consult with advisory services from a professional accountant or tax lawyer. It will help you ensure that you comply with all applicable laws and regulations. Thanks for reading! We hope this article was helpful. If you have any questions, feel free to contact us. We would be happy to help! Thank you!

Sohail Afzal CPA Toronto

Sohail Afzal, CPA, CMA, MBA

Sohail Afzal, (CPA, CMA, MBA) is the founder & CEO of GTA Accounting Professional Corporation. He is a highly experienced Chartered Professional Accountant and businessman himself and understands the challenges that many businesses face when it comes to cash flow management. As an experienced business consultant & tax advisor, he is helping companies grow by providing the technical, financial, and contractual information necessary for strategic decision-making.

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