The holiday season is fast approaching. With 2020 providing us ample opportunity for re-evaluating our values and priorities, have your corporate holiday plans changed? What are your plans for gifting to your employees?
Here are the rules:
- Canada Revenue Agency allows you to give your employees gifts costing up to $500 annually without tax consequence to your employee. This could include a birthday gift, a gift for the birth of a child, holiday season, etc. It’s worth noting that small items such as coffee mugs, the clothing with your company logo on it, coffee and tea don’t count toward this $500 total. If your gifting exceeds the $500 limit, the overage is a taxable benefit to your employee. A $700 annual gift would result in a $200 taxable benefit for your employee.
- Cash and gift certificates are considered to be a form of compensation that results in a taxable benefit to your employee. While our employees may enjoy the freedom of cash stuffed in a Christmas card, they would likely prefer if they didn’t have to pay tax on a gift. With gifting cash, there is the added possibility of a denied deduction as there is zero proof of where the cash went.
- Event tickets or vouchers qualify as non-taxable benefits as they are redeemable for a specific thing. For example, a voucher that entitles you to a Widget at XYZ Store doesn’t offer much choice to the recipient and therefore qualifies as a gift. Now that we know the parameters, the big challenge is to come up with thoughtful, creative and non-taxable gift ideas. Think about what your employees stress about. What gift can make their lives just a little bit better?
Let’s be honest. Deciding what to have for dinner is the absolute worst part of adulting. Imagine taking a bag of ingredients out of the fridge and simply following the step by step recipe to create a decent meal. THIS is far more relaxing to me than a spa treatment. We’re talking ONGOING stress relieve here!
House cleaning service voucher
This one speaks for itself.
Online cooking class/or tasting experience voucher
Many folks are craving “date night” with their significant other. With Covid-19 restrictions (travel, social outings), many couples are struggling to find opportunities to reconnect. Here is a great Covid-19 protocol compliant date night.
Subscription to a (cool product) of the month club
People like receiving mail that isn’t a bill. It’s a gift that keeps on giving!
Check out some locally crafted gifts/experiences. Support a small to medium business in your own back yard. The Greater Edmonton Area has some fantastic:
- Craft Breweries
- Jewelers and crafters
- Olive oils, sauces, spice blend merchants
- Soaps and lotions
- Many many more.
If you’re struggling to come up with a brilliant idea, you could always ask your employees for input. Small to medium business owner-operators often know their employees really well. If this is the case, ask them what they’d like. Perhaps you could give them a budget and a catalog/website to peruse. This would take some of the gifting stress off of your shoulders; the employee receives a non-taxable gift that they actually want and you get a deduction for tax purposes. Win, win, and win.
Taxable versus non-taxable benefits can be difficult to sort out. If you have got any questions about how to show your appreciation to your staff, feel free to reach out. We’re always happy to help!
Angela Richardson is a Chartered Professional Accountant (CPA, CGA) with more than 17 years experience working in public practice with small to medium sized businesses. While financial statements and tax returns are part of the occupation, consulting and assisting clients to achieve their entrepreneurial dreams is her true passion.