Four Conditions On A Gift Card

Almost every employer in Canada does this. Something at the holidays, something when a baby arrives, something at ten years. Very few of them treat it as a payroll question, and the rules changed twice in the space of two years.

A Note On Currency

Everything here is stated as verified in August 2026 and requires confirmation before reliance.

This area has changed repeatedly. The gift card treatment changed effective 1 January 2022, the long-service award treatment changed again on a date reported as 6 September 2023, and CRA issued a general reminder about taxable benefit policy updates in May 2023[1][2][3].

Because of that, several widely circulated professional publications on this topic are out of date, and we identify one specific instance below where a reputable source states a position CRA subsequently reversed.

One of our sources is a payroll software vendor's help article, which we use for a single dated change and identify as such[2].

We did not resolve one important question about social events, and say so plainly in its own section rather than guessing.

This is not tax advice. Employers should work from CRA's current published policy pages, which are updated without announcement.

Policy, Not Legislation

The foundation, which determines how the rest should be read.

Every source describes this as CRA's administrative policy rather than as a statutory exemption[1][4][5].

Three consequences, ours.

The starting point in law is that a benefit conferred on an employee by reason of employment is income. The $500 policy is a concession CRA administers, not a provision that removes the benefit from income.

Which means it can be, and has been, changed by CRA without legislation. Both of the changes described in this article were policy updates announced on a website.

And it means the conditions matter more than they would if this were a statutory threshold. A concession applies on its own terms, and an employer outside those terms is back to the general rule rather than in a grey area.

CRA's own reminder in May 2023 asked employers to review updates to policies on gifts, awards, long-service awards, social events, hospitality functions, and parking[3], which is a fair indication of how many moving parts there are and how quietly they move.

The Five Hundred Dollar Rule

The core concession.

Commentary describes CRA's policy as being that certain employer-provided non-cash gifts and awards with a combined total value of up to $500, including taxes, in a year will not result in a taxable benefit to an arm's length employee[4].

Another puts it as the first $500 per employee per year being considered non-taxable, and notes that this administrative policy applies to non-cash gifts or awards only[5].

Three points worth isolating, ours.

The limit is per employee per year, not per occasion. Commentary makes the point directly, noting employers must be mindful that the limit is per-year rather than per-occasion[6]. An employer giving something at a birthday, something at the holidays and something for a wedding is drawing on one pool.

It is including taxes, so the relevant figure is what the employer actually spent including GST or HST, not the pre-tax cost.

And it is combined across all non-cash gifts and awards, so the employer needs a running total per person rather than a policy per event.

Only The Excess Is Taxed

A point of relief that is frequently misunderstood.

CRA states that if the total of non-cash gifts and awards are more than $500, the amount over $500 is taxable[7]. Commentary agrees, stating that if the combined total exceeds the limit, only amounts over the limit must be included in the employee's income[4].

Our own arithmetic on that: $400 of non-cash gifts produces a taxable benefit of nil. $500 produces nil. $600 produces $100. $900 produces $400.

Two observations.

This is a threshold, not a cliff, which distinguishes it from several other rules in this series where crossing a line disqualifies everything.

Which means an employer who exceeds the limit has a reporting problem rather than a disaster. The right response is to include the excess as a benefit, not to abandon the programme.

We stress this because the fear of the limit sometimes produces worse outcomes than exceeding it. An employer who switches from a $600 item to $600 of cash to keep things simple has converted a $100 taxable benefit into a $600 one.

The Conditions On A Gift

The qualifying criteria, which go well beyond the dollar figure.

Commentary sets out CRA's policy as treating a non-cash gift or award as not taxable where the aggregate fair market value of all non-cash gifts or awards provided in the year is $500 or less including taxes; in the case of a gift, the gift was for a special occasion; in the case of a recognition award, it was for the employee's overall contributions to the workplace; and the gift or award was not related to the employee's job performance[1].

On what counts as a special occasion, commentary states that for these purposes a gift must be for a special occasion such as a religious holiday, a birthday, a wedding or the birth of a child[8].

Two observations, ours.

The policy distinguishes gifts from awards and applies a different condition to each. A gift needs an occasion; an award needs to be for overall contribution.

And the occasions listed are personal and calendrical. They are things that happen to a person or on a date, not things the person did at work.

That distinction is the subject of the next section, because it produces a result most employers would not predict.

Recognising Performance Makes It Taxable

The condition that catches the best-intentioned programmes. This section is our own analysis.

The fourth criterion is that the gift or award was not related to the employee's job performance[1].

Set that against how employers actually run recognition.

An award for hitting a sales target is related to job performance.

An award for the best idea in a process improvement programme is related to job performance.

An employee of the month prize is, on its face, related to job performance.

An award for overall contributions to the workplace, which is the phrase the policy uses, is something different: a general recognition of a person's part in the organisation rather than a reward for output.

Three consequences.

The programmes most likely to fail are the ones with the clearest criteria, because measurable criteria are usually performance criteria.

The distinction is visible in the employer's own documentation, since the award terms, nomination forms and internal announcements say what it was for.

And an employer cannot fix it by relabelling. If a programme is described internally as rewarding results, describing the award differently in the payroll file does not change what it was for.

We would put it this way: the policy is aimed at gestures, not at incentives. An incentive is compensation, and compensation is taxable.

Cash And Near-Cash Are Always Taxable

The exclusion, which is stated firmly and broadly.

Commentary states that cash or near-cash gifts or awards are taxable, and that this includes employer-reimbursed items as well as items that can easily be converted to cash, most gift cards, prepaid credit cards issued by financial institutions and digital currencies such as Bitcoin[1].

CRA states that the administrative policy does not apply if you provide an employee a gift or an award and it is considered cash or near-cash. The benefit is taxable[7].

Two observations, ours.

The test is convertibility. Something that functions as money, or can readily become money, is treated as money.

And prepaid credit cards issued by financial institutions are named specifically and sit on the wrong side of the line. A card branded by a payment network and usable anywhere is not a gift card for these purposes, whatever it is called in the office.

That is a distinction with no intuitive support. To the person receiving it, a prepaid card and a retailer gift card feel identical. To the policy they are opposite.

The Reimbursement Trap

A specific inclusion in the near-cash category that we think catches more employers than gift cards do.

CRA states that cash and near-cash includes reimbursements, where the employee selects and purchases something and then submits a receipt to the employer, receiving cash in return[7]. Commentary lists employer-reimbursed items in the same category[1].

Consider how common that arrangement is, and this is our own observation.

An employer that wants to give people something they actually want frequently says: pick something up to a limit and send us the receipt. It is thoughtful, it is administratively simple, and it is squarely inside the near-cash definition.

The same employer buying the same item and handing it over is potentially inside the concession.

Three consequences.

The employee's choice is not the problem. An employer can offer a catalogue and let people choose, provided the employer buys and provides the item.

The problem is money moving to the employee. Once the employee is out of pocket and made whole in cash, the transaction is a reimbursement.

And it is a process failure rather than a policy failure. The employer intended a gift, budgeted for a gift, and delivered it in a way that made it salary.

Five Ways To Give Four Hundred Dollars

The whole point of the article in one table, computed by us on a $400 value.

The employer buys a $400 item and gives it: non-cash, may fall within the $500 limit. Taxable benefit potentially nil.

The employer gives $400 in cash: taxable in full. $400.

The employee buys it and is reimbursed on a receipt: treated as cash, taxable in full. $400.

A $400 gift card meeting all four conditions: non-cash, may fall within the limit. Potentially nil.

A $400 gift card missing one condition: near-cash, taxable in full. $400.

Two observations, ours.

The value is identical in all five. The employer spends $400 and the employee receives $400 of value. The tax outcome ranges from nothing to the entire amount.

And the variable is administrative. It is who bought the thing, what was written on the card, and whether a record was kept.

This is unusual. Most of the exposures in this series arise from judgments about substance. This one arises from process, which means it is also the most straightforward to fix.

The Gift Card Conditions

The change of 1 January 2022, and its four requirements.

Commentary describes the position before the change: historically, CRA considered gift cards to be a cash gift, meaning they would not be eligible for the $500 non-taxable limit and would be treated as taxable to the recipient[5].

CRA's updated policy provides that a gift card is considered non-cash if all of the following apply[7][4][5]:

It comes with money already on it, described elsewhere as provided with pre-loaded funds.

It can only be used to purchase goods or services from a single retailer or a group of retailers identified on the card.

The terms and conditions clearly state that amounts loaded to the card cannot be converted into cash.

And a log is kept recording gift card information.

Commentary adds that the updated policy also applies to gift certificates, chip cards and electronic gift cards, and that if any one of the conditions is not met, the gift card is considered a near-cash benefit and is taxable[8].

Our own observation is about the structure of that test. It is conjunctive and unforgiving: four conditions, all required, with failure of any one producing full taxability rather than partial.

Two of the four are about the card itself and are decided by the retailer who issued it. One is about what the terms say. And the fourth is about something the employer does, which is the subject of the next section.

The Condition That Is A Record

The fourth requirement, which is different in kind from the other three. This section is our own analysis.

Three of the conditions describe properties of the card. An employer buying a retailer gift card that is preloaded and non-convertible satisfies them by purchasing the right product.

The fourth requires the employer to keep a log recording gift card information[5].

That is an ongoing obligation rather than a purchasing decision, and it has three consequences.

It can be failed retrospectively. An employer who bought entirely compliant cards and kept no record has, on the face of the policy, not met all four conditions.

It cannot be reconstructed convincingly after the fact, in the way an invoice can be located. A log made in one sitting two years later is not a log.

And it is the condition most likely to be overlooked, because the other three are satisfied at the point of purchase and feel like the whole test.

We flag that we obtained the log requirement from commentary describing CRA's policy[5] and did not obtain CRA's own specification of what the log must contain. An employer should take that detail from CRA's page directly rather than from this description.

Long Service Awards

A separate concession with its own conditions.

Commentary describes non-cash long service awards as not taxable where the fair market value of the award is $500 or less including taxes and it was given in recognition of five or more years of service with the employer, provided it has been at least five years since the last such award[1].

CRA's current statement of the policy is that a long-service award is not taxable if it is a non-cash gift or award, including gift cards that meet the relevant conditions[7].

CRA also illustrates the five year spacing with an example: if a fifteen year award was provided at seventeen years of service, and the next award is provided at twenty years of service, the twenty year award is affected[7]. We did not obtain the conclusion of that example and do not state it.

Two observations, ours.

The spacing rule runs from the last award, not from the milestone. That is what CRA's example is testing, and an employer who gives an award late has moved the clock for the next one.

And the concession is tied to years of service rather than to an occasion or a contribution, which makes it the most mechanical of the three concessions and the easiest to administer correctly.

Two Pools That Do Not Cross-Subsidise

A point CRA makes in both directions, which is worth setting out precisely.

CRA states that long-service awards have their own $500 limit, and that the unused portion of the $500 limit for long-service awards cannot be applied to non-cash gifts and awards. It also states that the unused portion of the $500 limit for non-cash gifts and awards cannot be applied to long-service awards[7].

So the separation is symmetric and complete.

Our own illustration of what that costs. An employer gives an employee $200 of ordinary gifts during the year, leaving $300 of unused room, and a $700 long-service award.

The unused $300 is not available. The taxable benefit is $200, being the excess over the long-service pool, rather than nil.

Two consequences.

An employer administering a single combined budget per employee will get this wrong, because the arithmetic that matters is two separate running totals.

And the error is invisible in the aggregate. Total spend of $900 against total room of $1,000 looks compliant, and is not.

A Widely Cited Answer That Went Stale

An instance worth recording, because it illustrates a risk running through this whole subject.

A national law firm publication from November 2022 states that non-cash long service awards will not be taxable if the value is $500 or less including taxes, it is not a gift card, and it was given in recognition of five or more years of service[1].

A payroll software vendor's help article records that on 6 September 2023 CRA announced a change to its administrative policy on gift cards for long-service awards, and that before this change, CRA considered that gift cards given for long service awards were a taxable benefit and did not fall under the $500 exemption. Under the new policy, gift cards meeting the non-cash conditions are eligible for the $500 long-service exemption, subject to the service and spacing requirements[2].

CRA's own current page is consistent with the later position, referring to a long-service award being non-taxable where it is a non-cash gift or award including gift cards meeting the conditions[7].

Three observations, ours.

The 2022 publication was correct when written. It is not an error; it is a snapshot.

An employer relying on it today would overtax long-service gift cards, which is a real cost to employees and an unnecessary one.

And that publication remains available, prominent and professionally authored. Nothing on its face signals that a specific sentence has been overtaken.

We flag that our source for the September 2023 date is a payroll software vendor's help article[2]. We use it for the date and the description of the change, and an employer should confirm the current position on CRA's own page rather than from either source.

The Owner-Manager Cannot Use It

An exclusion that matters most to the readership of this publication.

CRA states that you cannot include the gift or award in the $500 limit where they are gifts and awards provided to non-arm's length employees, or gifts and awards provided by manufacturers and other payers to your employees[7].

Commentary consistently frames the concession as applying to an arm's length employee[4][5].

Three consequences, ours.

A shareholder-employee of their own corporation is not dealing at arm's length with it, so the concession does not appear to be available to them at all.

The same applies to family members employed in the business, which in a private Canadian company is a substantial part of the payroll.

So the population most likely to read an article about the $500 rule and apply it to themselves is the population it excludes.

We flag that whether a particular employee deals at arm's length with a particular employer is a question of fact and law we have not analysed, and that anyone in a family business should establish it rather than assume it. But the direction of the rule is clear enough to matter: an owner-manager giving themselves a $500 non-cash gift should not expect the concession to apply.

Gifts From Customers And Suppliers

A useful allocation of responsibility.

Commentary states that where an employee receives a gift directly from a customer or supplier of the employer, the tax reporting is the obligation of the customer or supplier, not the employer[1].

This sits alongside CRA's statement that gifts and awards provided by manufacturers and other payers to your employees cannot be included in the employer's $500 limit[7].

Two observations, ours.

The two statements are consistent and complementary. The third party's gift is not the employer's to report, and it also does not consume the employer's room.

And the practical consequence runs the other way for a business that gives. A supplier sending gifts to a customer's staff at the holidays is, on this description, the party with the reporting obligation.

That is worth knowing in sectors where supplier gifting is routine. The giving business may be acquiring an obligation in respect of people who are not its employees, and we did not research how that obligation is discharged.

Social Events And Hospitality

A separate concession with its own numbers.

Commentary describes gifts and awards as excluding items which are social events and hospitality functions, unless they are available to all employees, cost $150 or less including taxes per person, and are within the maximum annual limit of six employer-paid social events[1].

CRA's May 2023 reminder notes that a new category was created for virtual social events[3], and commentary confirms that policies formulated during the pandemic for virtual events remain in place[6].

Three conditions, all required on that description, and each capable of failing independently.

Available to all employees. An event for a department, a team or a management group is not.

$150 or less per person including taxes. A per-head figure, so total cost divided by attendees.

Within six employer-paid social events a year. A count, which nobody keeps.

Our own observation is that the third condition is the one most likely to be breached without anyone noticing, because social events accumulate informally: a summer barbecue, a holiday party, a team dinner, a retirement, an anniversary, a client-and-staff mixer.

A Question We Could Not Settle

A gap we are flagging rather than filling.

The gifts and awards concession is explicit that where the $500 is exceeded, only the excess is taxable[7][4].

Our sources do not say the equivalent for social events. They state the concession applies where the cost is $150 or less per person[1], and do not address what happens at $180.

Two readings are available and they produce very different answers.

On an excess-only reading, an event at $180 a head produces a $30 taxable benefit per attendee.

On a whole-amount reading, it produces a $180 taxable benefit per attendee.

Across a hundred people that is the difference between $3,000 and $18,000 of benefits to report.

We did not establish which is correct and are not going to guess. We note that the gifts concession says expressly that only the excess is taxed, and that our sources on social events do not say so, and that the absence of the same statement is a reason for caution rather than comfort.

Any employer planning an event near the threshold should settle this from CRA's own page before committing, because on the second reading the cost of going slightly over is disproportionate.

Quebec Was Already There

A jurisdictional note.

Commentary observes that under Revenu Quebec's existing administrative policy on gifts and rewards, gift cards, gift coupons and gift certificates that can only be used to purchase goods or services from a particular business or list of businesses are considered non-cash gifts and rewards, and as such may be included in the balance of up to $500 that does not result in a taxable benefit for Quebec purposes[8].

Our own observation is that the word existing is doing the work. On this description, Quebec already treated retailer gift cards as non-cash before the federal change, so the 2022 update moved the federal position toward the provincial one rather than the reverse.

Two practical points.

An employer operating in Quebec had, on this description, a divergence to manage before 2022 and less of one afterwards.

And the conditions are described differently in the two policies, so alignment in outcome is not the same as identity in wording. We did not research the Quebec policy and a Quebec employer should not rely on the federal conditions as a proxy for it.

What Getting It Wrong Costs

The scale, computed by us on illustrative assumptions.

Take an employer with 60 employees giving $600 of gift cards each.

If all four conditions are met, the taxable benefit is $100 each, being the excess over $500, or $6,000 in total.

If one condition is missed, the cards are near-cash and taxable in full: $600 each, or $36,000.

The difference in unreported benefits is $30,000 in a single year.

At an assumed 30 percent, the employer-side exposure is roughly $9,000 a year, $18,000 over two years, $27,000 over three and $36,000 over four.

Three cautions, ours. The rate is assumed and stands in for a mix of employee tax and employer contributions we did not compute separately. We did not research penalties or interest. And the amounts would ordinarily be the employees' tax rather than the employer's, though as this publication has described in the payroll review context, an employer that failed to deduct can find itself responsible for amounts it never withheld.

The structural point survives. A single missing condition multiplies the reportable benefit sixfold on these figures, and the condition most likely to be missing is a log.

What The Auditor Actually Examines

The enquiry in practice. This section is our own analysis.

The general ledger accounts for staff gifts, recognition, morale and entertainment, which is where this is visible.

Gift card purchases, and whether a log exists covering them.

Card terms and issuers, distinguishing retailer cards from prepaid payment-network cards.

Expense reimbursements described as gifts, which are near-cash on CRA's stated policy.

Recognition programme documentation, tested against the not-related-to-performance condition.

Running totals per employee, on two separate pools rather than one.

Non-arm's length recipients, who cannot use the concession at all.

Social event counts and per-head costs, against the three conditions.

The first item deserves emphasis. Unlike most exposures in this series, this one is plainly labelled in the accounts. An employer's own ledger names the account, and the invoices behind it identify what was bought.

What Records Survive

A gift card log, maintained contemporaneously, which is itself one of the four conditions.

Card terms and conditions as issued, evidencing non-convertibility and the identified retailers.

A running total per employee for non-cash gifts and awards, and a second one for long-service awards.

The occasion or basis for each item, since a gift needs a special occasion and an award needs to be for overall contribution.

Recognition programme terms, which evidence whether the award related to performance.

Service dates and prior long-service award dates, for the five year spacing.

Social event records showing attendance, total cost, per-head cost and a count of events in the year.

What To Do

Buy the item, do not reimburse it. CRA treats reimbursements as cash, so the same gift becomes fully taxable because of how it was paid for.

Check all four gift card conditions, especially the log. Three are satisfied at purchase; the fourth is an ongoing record and failing any one makes the card taxable in full.

Avoid prepaid payment-network cards. Commentary names prepaid credit cards issued by financial institutions as near-cash regardless of amount.

Keep two running totals per person. The gifts pool and the long-service pool do not top each other up in either direction.

Check what the award is for. Anything related to job performance falls outside the concession, however modest.

Do not assume owner-managers qualify. Gifts to non-arm's length employees cannot be included in the $500 limit.

Count your social events. The six-event annual limit is a condition, and nobody tracks it.

Settle the social event excess question before planning near $150. Our sources do not say whether exceeding it taxes the excess or the whole amount, and the difference is large.

Do not exceed the limit by switching to cash. Going over produces a benefit equal to the excess; paying cash produces one equal to the whole amount.

Re-read the policy each year. It changed in 2022 and again in 2023, and professional commentary written between those dates is now wrong on a specific point.

The Limits Of This Analysis

Several caveats matter. This is not tax advice. Everything is stated as verified in August 2026 and requires confirmation, and this area is administrative policy which CRA changes without legislation and has changed at least twice recently. We did not obtain CRA's specification of what a gift card log must contain and take the requirement from commentary. We did not obtain the conclusion of CRA's own worked example on long-service award spacing and do not state it. We did not establish whether exceeding the social event per-person threshold makes the excess or the whole amount taxable, set out both readings, and expressly decline to choose. We did not research the Quebec policy and rely on a single description of it. Our source for the September 2023 long-service gift card change is a payroll software vendor's help article. We did not research penalties or interest and state none. We did not analyse when an employee deals at arm's length with an employer, which determines whether the concession is available at all. We did not address the CPP and EI treatment of these benefits beyond noting one source's reference to withholding on cash gifts, and did not establish whether non-cash benefits are treated the same way. All arithmetic is our own, uses an assumed composite rate standing in for a mix of employee tax and employer contributions, and is illustrative only. The delivery-method framing, the observation about incentives against gestures, the two-pool illustration and the audit examination structure are our own. This article does not address employer-provided parking, virtual event mechanics, wellness or lifestyle spending accounts, or benefits provided to non-employees.

Related Reading

Payroll The Standby Charge The other taxable benefit that owner-managers routinely compute on the wrong basis. Payroll Nobody Selected You What happens when benefits were never put through payroll and CRA compares the slips. Corporate Tax Employee Stock Options Where non-cash compensation is taxed on a basis of its own.

Frequently Asked Questions

Can we give staff $500 tax-free every year?

Non-cash gifts and awards to an arm's length employee totalling $500 or less including taxes in a year are not a taxable benefit under CRA's administrative policy, subject to conditions about the occasion, the basis of any award, and it not relating to job performance. It is per year rather than per occasion.

Are gift cards allowed now?

They can be, since 1 January 2022, if four conditions are all met: the card is preloaded, usable only at a single retailer or identified group, its terms state the amounts cannot be converted to cash, and the employer keeps a log. Missing any one makes the card near-cash and taxable in full.

Can we just reimburse people for something they choose?

That makes it taxable. CRA's policy treats reimbursements as cash, including where the employee selects and purchases something, submits a receipt and receives cash in return. The employer buying the same item and providing it can fall within the concession.

We gave small gifts and a big long-service award. Can the unused room help?

No, in either direction. CRA states that the unused portion of the long-service limit cannot be applied to non-cash gifts and awards, and that the unused portion of the gifts limit cannot be applied to long-service awards. Two separate running totals are needed per employee.

Does the $500 apply to the owner?

CRA states that gifts and awards provided to non-arm's length employees cannot be included in the $500 limit. A shareholder-employee and family members employed in the business should establish their position rather than assume the concession applies, since the direction of the rule points against it.

What if the staff party costs more than $150 a head?

We could not settle that from our sources and will not guess. The gifts concession says expressly that only the excess is taxable; our sources on social events do not say the same, and the absence is a reason for caution. Across a large event the two readings differ by a great deal, so confirm it before committing.

References

1. Borden Ladner Gervais. (2022, November). CRA Clarifies When Gifts or Awards Given to Employees Are Taxable, on CRA having updated its administrative policy effective for 2022 and subsequent years; on cash or near-cash gifts or awards being taxable, including employer-reimbursed items, items easily converted to cash, most gift cards, prepaid credit cards issued by financial institutions and digital currencies; on a non-cash gift or award not being taxable where the aggregate fair market value of all such gifts or awards in the year is $500 or less including taxes, where in the case of a gift it was for a special occasion, where in the case of a recognition award it was for the employee's overall contributions to the workplace, and where it was not related to the employee's job performance; on only the excess above $500 being taxable and long-service awards having their own $500 limit; on social events and hospitality functions being excluded unless available to all employees, costing $150 or less including taxes per person and within a maximum annual limit of six employer-paid social events; on non-cash long service awards not being taxable where the value is $500 or less including taxes, it is not a gift card, and it recognises five or more years of service with at least five years since the last such award; on gifts received directly from a customer or supplier being the reporting obligation of that customer or supplier rather than the employer; and on the employer withholding income tax, CPP and EI where a taxable cash gift or award is provided. Note: a national law firm publication dated November 2022. Its statement that a long-service award must not be a gift card was correct when written and was subsequently reversed by CRA, as discussed in the text. blg.com
2. Knit People. CRA Treatment of Gift Cards for Long-Service Awards: New CRA Administrative Policy, on CRA having announced on 6 September 2023 a change to its administrative policy related to gift cards for long-service awards; on CRA having previously considered that gift cards given for long service awards were a taxable benefit and did not fall under the $500 exemption; and on the new policy allowing gift cards meeting the non-cash definition to be eligible for the $500 exemption where the card is provided to recognise five or more years of service, at least five years have passed since the last long-service award, the card is for a single retailer or group of retailers identified on the card, and it is preloaded with a dollar amount that cannot be exchanged for cash. Note: a payroll software vendor's help article; we use it for the date and description of the change and an employer should confirm the current position with CRA directly. knitpeople.com
3. Canada Revenue Agency. (2023, May 31). A Reminder to Review the Canada Revenue Agency Policies on Taxable Benefits, on employers being asked to review the 1 January 2023 updates to taxable benefits policies on gifts, awards, long-service awards, social events, hospitality functions and parking; on certain gift cards that cannot be converted into cash being treatable as non-cash if they meet CRA's criteria and being includable in the $500 limit for non-cash gifts and awards during the year; on a new ratio provided for parking to simplify when a taxable benefit must be included where a limited number of spaces are provided; and on a new category having been created for virtual social events. Note: a CRA primary publication. canada.ca
4. EY. Canada Revenue Agency Announces Changes to Its Administrative Policies for Certain Employee Taxable Benefits, on CRA having updated its website to announce changes effective 1 January 2022 relating to gift cards under the employee gifts, awards and long-service awards policy, virtual events under the social events and hospitality functions policy, and scramble parking under the employer-provided parking policy; on certain employer-provided non-cash gifts and awards with a combined total value of up to $500 including taxes in a year not resulting in a taxable benefit to an arm's length employee; on only amounts over the limit being included in income where the combined total is exceeded; on long service awards having a separate $500 limit; on cash or near-cash gifts and awards being taxable with the administrative policy not applying; and on the gift card conditions requiring pre-loaded funds, use only at a single retailer or identified group of retailers, and terms specifying that it cannot be converted into cash. Note: a professional services firm tax alert. ey.com
5. Gregory, Harriman & Associates LLP. (2023, January). Updated CRA Policy: Employee Gifts and Awards, on CRA's administrative policy being that arm's length employees can be provided with non-cash gifts or awards with the first $500 per employee per year considered non-taxable, and on that policy applying to non-cash gifts or awards only; on CRA historically having considered gift cards to be a cash gift, not eligible for the $500 limit and taxable to the recipient; on CRA having changed that policy in late 2022 effective back to 1 January 2022 so that certain gift cards are considered non-cash; and on the conditions including that the card comes with money already on it, can only be used at a single retailer or identified group, the terms clearly state amounts cannot be converted into cash, and a log is kept to record gift card information. Note: a public accounting firm publication; we take the log requirement from this description and did not obtain CRA's specification of its contents. gh-a.com
6. Akler Browning LLP. Potential Tax Consequences of Holiday Gifts and Celebrations, on non-cash holiday gifts up to $500 being receivable free of tax; on the $500 limit being a per-year and not a per-occasion limit, with the portion over $500 in any one taxation year being a taxable benefit; and on the tax treatment of employer-sponsored social events having its own rules subject to frequent change, with administrative policies formulated during the pandemic for virtual events remaining in place. Note: an accounting firm publication. aklerbrowning.com
7. Canada Revenue Agency. Gifts, Awards, and Long-Service Awards, payroll benefits and allowances guidance, on the amount over $500 being taxable where the total of non-cash gifts and awards exceeds that figure; on long-service awards having their own $500 limit, with the unused portion of the long-service limit not applicable to non-cash gifts and awards and the unused portion of the gifts limit not applicable to long-service awards; on gifts and awards provided to non-arm's length employees and those provided by manufacturers and other payers to employees not being includable in the $500 limit; on the new administrative policy from 1 January 2022 under which a gift card is considered non-cash if it comes with money already on it and can only be used at a single retailer or an identified group of retailers, among other conditions; on the administrative policy not applying where a gift or award is cash or near-cash, including reimbursements where the employee selects and purchases something, submits a receipt and receives cash in return; on a long-service award not being taxable under the updated policy where it is a non-cash gift or award including qualifying gift cards; and on a worked example concerning a fifteen year award provided at seventeen years of service followed by a twenty year award. Note: a CRA primary publication; we did not obtain the conclusion of the worked example and do not state it. canada.ca
8. EY Law. Tax Alert 2023 No. 01: CRA Announces Changes to Its Administrative Policies for Certain Employee Taxable Benefits, on the updated gift card policy also applying to gift certificates, chip cards and electronic gift cards, and on the gift card being considered a near-cash benefit and taxable if any one of the listed conditions is not met; on a gift for these purposes needing to be for a special occasion such as a religious holiday, a birthday, a wedding or the birth of a child; and on Revenu Quebec's existing administrative policy treating gift cards, gift coupons and gift certificates usable only at a particular business or list of businesses as non-cash gifts and rewards, includable in the balance of up to $500 that does not result in a taxable benefit for Quebec purposes. Note: a professional services firm tax alert; we did not research the Quebec policy independently. eylaw.ca

This article is provided for general informational purposes and is not tax advice. The rules described are CRA administrative policy which the Agency changes without legislation and which changed at least twice between 2022 and 2023; one reputable source cited here states a position CRA subsequently reversed, and this is identified in the text. Whether exceeding the social event per-person threshold taxes the excess or the whole amount was not established and is expressly left open. All arithmetic is the authors' own and is illustrative only.