If you’ve decided to express gratitude to your team by giving them gift cards, a popular and seemingly simple option, you should be aware of the tax guidelines from the Canada Revenue Agency (CRA) which took effect on January 1, 2022.
CRA Policy Changes Regarding Gifts Cards
Gift cards were previously considered near-cash benefits, making them taxable to employees. Now, however, specific types of gift cards are considered non-cash and are therefore non-taxable when certain conditions are met. These conditions include:
- The card is pre-loaded with money (that cannot be converted into cash) and can only be used to buy goods or services from a single retailer or group of retailers identified on the card.
- A log is kept that contains the following information:
- the employee’s name,
- the date the gift card was given to the employee,
- the reason the gift card was given to the employee,
- the type of gift card,
- the amount of the gift card, and
- the name of the retailer(s).
- It must be for the employee’s overall contribution to the workplace if it is a recognition award.
- It should be provided as a gift and not be related to job performance (as this is a taxable bonus).
For more information on CRA policies related to employee gifts and gift cards, click here.
Accounting and Advisory Support for Business Owners
KWB Accountants & Advisors helps you navigate CRA guidelines and helps you understand and implement all relevant programs and opportunities.
To learn more about how KWB can help you simplify your accounting, improve your profit, and achieve your goals, book an introductory meeting here!
