CRA Changes its Policy on Gift Cards
As an employer, you might be interested in a new CRA administrative policy announced recently but took effect on January 1, 2022.
Historically, giving gift cards to employees was considered a taxable benefit. However, the new policy allows giving gift cards up to a $500 value, tax-free to the employee, under specific conditions that are not difficult to meet.
The conditions are:
- The card comes with a fixed amount already on it.
- It is not reloadable.
- It can only be used to purchase goods or services from a single retailer or a group of retailers identified on the card.
- You keep a record of the following:
- Name of employee
- Date you gave the gift card to the employee
- Reason for providing the gift card
- It must be a gift not tied to performance. A holiday gift is an example of an acceptable reason
- Type of gift card
- Amount of the gift card
- Names of the retailers
Note that non-arms-length employees and their relatives do not qualify for this tax-free benefit. For more information, please refer to CRA’s article: