Kudos to the Tax Department!

Like most people I’m not a big fan of the tax department, however, kudos should go to the Canada Revenue Agency (CRA) that recently revised its rules on gifts and awards.

A number of years ago the CRA changed its taxation policies on the taxation of gifts and awards. On the whole, our industry viewed these changes very positively, however there were some areas that we felt could be improved upon.

The most contentious was to limit the number of gifts and or awards to two items having a total value of no more than $500. The CRA has amended this policy and as of January 1st, 2010, there no longer are limits to the number of tax-free non-cash gifts and awards you may give to an employee in a given year.

Another issue CRA clarified and simplified was to create a single $500 exemption that employers can now apply against the total value of all the qualifying non-cash gifts and awards you give to an employee. So, if you give an employee gifts and awards with a total value of $650, there is a taxable benefit of $150 ($650-$500).

Follow the link for CRA’s revised policy.

Many companies and groups asked CRA to make these changes and it is good to know that the department does listen!

Now if CRA would only reduce the service award threshold down from every five years to something that reflects the fact that people change jobs every three years, I’d be really happy! And while they’re at it, perhaps they could consider allowing points based performance awards up to $500 to qualify for exemption as well!

But I guess these are battles for another day!