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Don’t let the CRA Grinch ruin your Christmas party

Before you uncork the Dom Perignon champagne to celebrate another successful year with your employees, you need to check the rules regarding taxable employment benefits for staff.

Basically, CRA’s position is: “If you provide a free party or other social event to all employees and the cost is $150 per person or less, we do not consider it to be a taxable benefit. Additional costs such as transportation home, taxi fare, and overnight accommodation are not included in the $150 per person. If the cost of the party is greater than $150 per person, the entire amount, including the additional costs, is a taxable benefit.”

CRA has also indicated that the $150 per person limit is best calculated based on the number of people who attend the event, as opposed to the invitation list. The taxable benefit does not apply to people who did not attend. Also, CRA takes the position that in circumstances where employees are permitted to bring their spouses or other family members, the $150 per person limit still applies. However, ancillary costs such as travel would only be taxable if they’re not reasonable.

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