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Gift Cards Now a Tax-Free Treat for Your Staff

Just in time for Christmas, CRA introduced a new policy on gifts and awards.

CRA’s previous policy was that the first $500 of annual gifts and awards would be considered non-taxable benefits, however it would not apply to cash or near cash gifts. In the past CRA had considered all gift cards to be cash or near- cash gifts.

CRA will now accept certain gift cards to be non-cash and eligible to be a non-taxable benefit provided all of the following requirements are met:

  • the gift card comes with money already on it which the terms clearly state cannot be converted to cash;
  • the use of the gift card is limited to purchases from a single retailer or a group of retailers identified on the card;
  • the employer maintains a log to record all of the following details:
  1. Name of the employee
  2. date the gift card was provided
  3. reason for providing the gift card to the employee (e.g. gift, award, social event);
  4. type and amount of gift card; and

name of retailer(s) at which the gift card can be used.

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