CRA Treatment of Gift Cards for Long-service Awards (New CRA Administrative Policy)

On September 6, 2023, the CRA announced a change to its administrative policy related to gift cards for long-service awards.

Before this change, the CRA considered that gift cards given for long service awards were a taxable benefit and did not fall under the $500 exemption.

The CRA’s new administrative policy on long-service awards allows gift cards under the definition of a non-cash gift to be eligible for the $500 exemption if all of the following apply:

· The gift card is provided to recognize five or more years of service with the employer.

· It has been at least five years since the last long-service award was presented to the employee.

· 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.

The amendment to this administrative policy on long-service awards is retroactive to January 1, 2023.

Employers should update their gift policy on long-service awards to highlight the changes based on this new policy.

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