Gifts and Incentive Awards

Rules of Application

  • Cash and near-cash gifts and awards are always taxable.
  • Non-cash gifts and awards:
    • For federal tax purposes, administratively, it is not taxable where:
      • a maximum of 2 non-cash gifts or incentive awards are given to an employee per year
      • the cost of any 2 of the gifts or incentive awards does not exceed $500
    • Starting in 2010, for federal tax purposes, the first $500 in gifts and awards is not taxable
    • For Quebec tax purposes, the first $500 is not taxable.
  • Social events are not taxable if:
    • provided to all employees, and
    • the cost does not exceed $100 per person.
  • If the cost exceeds $100 per person, then the global amount is a taxable benefit.

Computation of Benefit

  • Benefit = FMV of gifts or incentive awards.
  • Benefit includes applicable GST/QST/HST for non-cash gifts or incentive awards.