We are often asked by employers about the tax consequences of gifts and awards to employees.
Cash and near-cash gift and awards are always a taxable benefit to the employee.Near- cash would be items such as gift cards,gift certificates,or items, that can turned quickly into cash such as gold nuggets or securities.
Non cash items ,such as tickets for sporting events,may not be taxable, if they are considered to be a gift or award.A gift can be given in recognition of a special event , such as a religious event ,birthday ,wedding,or the birth of a child.
An employer can give an employee several non-cash gifts totaling up to $500 annually and they will not be considered to be a taxable benefit if the gifts total over $500.The taxable benefit will be the value of the gifts exceeding $500.They can also give them award for an employment related accomplishment, such as outstanding services. However,the award cannot be related to achieving a job performance goal.
An employer can also provide there employee with a long service award once every five years, valued at $500 or less.
They do not need to include the value of trivial items that are provided to the employee,such as tea or coffee ,a shirt with the company name on it,or a mug.
if a gift is considered to be a taxable benefit , the employee be assessed for Canada Pension Plan and Employment, insurance Premiums.