As an employer you will go through cycles where business will be busy, slow, or somewhere in between. At the start and end of each busy season you will consider ways to motivate your team during busy seasons, and then think of ways to thank staff after the busy season ends. As we are nearing the end of our personal tax seasons, we are definitely considering ways to thank our staff for their hard work in the past few months.
Did you know there are two great ways to thank your staff with a gift that is tax-free to them and still have a 100% tax deduction to the business? Below we outline two ways you can spoil staff with a tax benefit!
Non-cash gifts such as presents, clothing, and other items purchased
- Historically these gifts must NOT have been cash or gift cards. Cash and gift cards used to be taxable gifts for the employees. This rule has changed and gift cards with a finite list of vendors (such as a mall gift card) is now considered a non-taxable gift, and a 100% write off to the business.
- Office-wide gifts (gifts given to all staff) can be up to $500 in the calendar year per employee
- Additional gift for special occasion (work anniversary, birthday, wedding) of a value of $500 or less can be provided in addition to the office-wide gift.
- Any amount given to staff over the $500 value will be a taxable benefit to the employee.
Staff parties
- Staff meals, office meals and other entertainment generally fall under “meals and entertainment” and are a 50% write off to your business.
- The event would be a 100% write off to your business if the entire organization receives an invite. If only one class of staff was invited (ie: management only), then the event would only be 50% deduction to the business.
- If the event is in-person or hybrid and the total cost is $150 or less per employee, the event is a non-taxable benefit to the employee ($50 for virtual parties)!
- Up to six parties per year is allowable
Our recommendation to you is that you show employees the appreciation they deserve and get a 100% tax write-off in the process. Outstanding and long-term staff are hard to find so thank them while you can!
If you require more information, please contact our office for trusted advice and personal service.