CRA Changes its Policy on Gift Cards

Author: External Author |

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: