Policy for 2009 and earlier

You can give each employee up to two non-cash gifts per year, tax-free, and up to two non-cash awards per year, tax-free.

If you give one non-cash gift or award per year and the total cost is more than $500, you have to include the fair market value of the entire gift or award in the employee's income.

Note

The $500 threshold is not an exemption.

If the total cost of the non-cash gifts you give an employee in a year is more than $500, or the total cost of the non-cash awards you give an employee in the year is more than $500, we allow you to choose which of the gifts or awards you exclude from the employee's income, as long as the total cost of the excluded gift(s) or award(s) is not more than $500. You have to include the fair market value of the remaining gift(s) or award(s) in the employee's income.

If you give more than two non-cash gifts per year and the total cost is $500 or less, or the total cost of the non-cash awards you give an employee in the year is $500 or less, we allow you to exclude the cost of any two of the gifts or awards from the employee's income. You have to include the fair market value of the remaining gifts or awards in the employee's income.

Payroll deductions

Where the benefit is taxable, it is also pensionable. Deduct CPP contributions and income tax.

If the taxable benefit is paid in cash, it is insurable. Deduct EI premiums. If it is a non-cash benefit, it is not insurable. Do not deduct EI premiums. For EI purposes only, near-cash taxable benefits are treated the same as non-cash taxable benefits. Therefore, they are not insurable. Do not deduct EI premiums.

Reporting the benefit

Include the taxable benefit in box 14, "Employment income" and in the "Other information" area under code 40 at the bottom of the employee's T4 slip. For more information, see T4 - Information for employers.

Date modified: