Taxable Benefits Updates

Effective October 18, 2022, the Canada Revenue Agency (CRA) has announced a retroactive update to the following taxable benefits, which are in force as of January 1, 2022.

If you provide your employees with gift cards, the gift card is considered non-cash, eligible for the $500 exemption if all of the following apply:

  • The gift card was provided to recognize a special occasion, an award for a work-related accomplishment, or as part of a social event
  • The gift card is for a single retailer or group of retailers identified on the card
  • The card is preloaded with a dollar amount that cannot be exchanged for cash
  • The employer maintains a log to record all gift cards provided to employees

This change in gifts and awards policy does not apply to prepaid cards issued by financial institutions that can be used to pay for purchases. It also does not apply to gifts of digital currency, for instance, cryptocurrencies that are not governed by a government or central bank (e.g., Bitcoin).

The CRA policy for long-service (anniversary) awards has not been amended to include gift cards. Only non-cash gifts are eligible for the $500 exemption.

There is no change to the CRA policy on performance rewards. When an employer provides an employee with a gift as a reward for performance-related reasons, the value of the gift is a taxable benefit.

The CRA has updated their policy on scramble parking. Going forward, when an employer provides a limited number of parking spaces for employees, a taxable benefit will not apply if:

  • No more than two parking spaces are available for every three employees who want to park (scramble parking)
  • Parking spaces are not assigned (random or uncertain)
  • Parking spaces are offered to all employees who wish to park
  • Social events

The CRA has amended the social events policy to recognize two different types of events that employers may provide. In-person events remain non-taxable if all of the following apply:

  • It is available to all employees
  • The cost is $150 or less (including taxes) per person, not including additional expenses such as transportation home, taxi fare, and overnight accommodation
  • Each event has a reasonable cost
  • The event is within the maximum annual limit for social events (a total of six employer-paid combined in-person and virtual social events)

If the event cost is more than $150 per person, the entire amount, including the additional costs, is taxable. Virtual events may also be provided to employees, and the amount an employer pays or reimburses employees will be considered non-taxable if all of the following apply:

  • It is available to all employees
  • If the virtual social event only includes meals, the total cost is $50 or less (including taxes) per employee, including the additional costs to deliver to the employee’s home address and delivery charges

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