On September 6, 2023, the CRA announced changes to its administrative policy relating to gift cards awarded to employees for long service. Previously the CRA considered gift cards awarded for long service a taxable benefit and did not fall under the $500 exemption.
The new administrative policy on long-service awards allows gift cards that fall under the definition of a non-cash gift are now eligible for the $500 exemption but all of the following must apply:
The gift card is provided in recognition of five or more years of service with the employer.
A long-service award hasn’t been presented to the employee for at least five years.
The gift card is for either a single retailer or group of retailers clearly identified on the card.
The card is preloaded with an amount that cannot be exchanged for cash.
The employer must maintain a log to record all gift cards provided to employees.
The good news is the amendment to this administrative policy on long-service awards is retroactive to January 1, 2023. That gives you a few months to squeeze in any awards you need to. Also, you will need to revisit those that you have already awarded in 2023 and make any necessary tax adjustments.
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