Holiday Gifts and Bonuses

It’s customary for employers to offer holiday gifts and year-end bonuses to their employees. It is important to understand the tax consequences for the employees.  Any gift (cash or non-cash) received by an employee from his or her employer at any time of the year is considered a taxable benefit to be included in the employee’s income for that year.  The CRA does make an administrative concession in this area allowing non-cash gifts given for special occasions. The non-cash gifts will not be taxable if the total fair market value to the employee is $500 or less annually.  The $500 limit is a per-year not a per-occasion limit.

Any cash or near-cash gifts should be avoided, as they will, no matter what the amount, create a taxable benefit to the employee. Although gift certificates or pre-paid credit cards are a popular choice, they aren’t a tax-effective one, as they will invariably be considered by the CRA to create a taxable benefit to the employee. More information on gifts is available on the Government on Canada website at Gifts, awards, and long-service awards – Canada.ca

Person holding wrapped gift