It’s nearing the end of the year… I know, where does the time go? I have no idea where summer went!
Often business owners like to give bonus gifts, rewards and so on at Christmas time or end of the year. BUT do you know what the limits are and what is taxable?
Any amount $500 and under can be given, either as gifts, gift cards or actual cash – without tax implications.
If you award someone with a $1000 bonus, $500 has to be claimed as a taxable benefit. Which means taking taxes and CPP off the amount.
If you award someone with a $650 gift card to the local shopping mall… yes, $150 of that money needs to be claimed as a taxable benefit. A gift card is considered cash because it can be spent like cash.
If you like to reward your employees at special times throughout the year, such as birthdays, weddings, births, do not exceed the $500 mark. Here is a link to the CRA site detailing some of the options: canada.ca/en/revenue-agency/services/tax/businesses/topics/payroll/benefits-allowances/gifts-awards-social-events.html.