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The Charter of the French language and its regulations govern the consultation of English-language content.

Gifts and Rewards

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The English version of this page is currently being updated. To access the page in French, click français.

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A gift or reward you give to an employee constitutes a taxable benefit whose value must be included in the employee's income. In the case of a non-monetary gift or reward, you must include GST and QST in the value of the benefit.

Tax-exempt benefits

The value of the following tax-exempt benefits should not be included in the employee's income:

  • a non-monetary gift given for a special occasion (such as Christmas, a birthday, a wedding or similar occasion), up to a value of $500 (including taxes) per year; and
  • a non-monetary reward given in recognition of certain accomplishments (such as reaching a certain number of years of service, meeting or exceeding safety requirements, or achieving similar objectives), up to a value of $500 (including taxes) per year.

If the value of the gift or reward is more than $500 (including taxes), only the portion that is over $500 is taxable. You have to include the portion that is over $500 in boxes A and L and, where applicable, in box G of the employee's RL-1 slip (see courtesy translation RL-1-T). For more information, go to the Benefit Provided to an Employee page.

Taxable benefits

The following benefits are fully taxable and their value should be included in the employee's income:

  • gifts and rewards paid in cash, or easily convertible into cash;
  • personal insurance premiums that you pay; and
  • gifts and rewards for work performance.

You have to include the value of these benefits in boxes A and L and, where applicable, in box G or box I of the RL-1 slip (see courtesy translation RL-1-T). For more information, go to the Benefit Provided to an Employee page.

Note

A gift certificate, gift coupon or gift card that has to be used to purchase goods or services from a particular business or list of businesses is not considered to be easily convertible into cash.

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Example – Cash or non-cash gifts or rewards

If you give an employee a gift valued at $100 for their birthday and another valued at $450 for Christmas, you have to include $50 (($100 + $450) − $500) in boxes A, G and L of the employee's RL-1 slip. If the gifts are cash gifts, however, the entire amount ($550) has to be included in boxes A, G, I and L.

Example – Personalized item with an employee's name or a corporate logo

If the reward (other than a reward in recognition of certain accomplishments) is an item that is personalized with an employee's name, a corporate logo or a message, you can subtract an amount that is reasonable in the circumstances from the value of the benefit to be included in the employee's income. If the reward is a plaque, trophy or other memento of nominal value for which there is no market, it is not considered a taxable benefit.

Example – Incentive bonuses or prizes related to sales

Incentive bonuses and other prizes (in cash or in kind) related to sales made in the course of employment or a business also constitute a taxable benefit. If a portion of a prize or an incentive bonus is paid in kind, include GST and QST in the calculation of the benefit.

Example – Gift or reward offered by a supplier or a client

If an employee receives a gift or reward directly from a supplier or client, the supplier or client must file an RL-1 slip in the employee's name and include the value of the gift or reward in boxes A and L and, where applicable, in box G or box I of the slip (see the Benefit Provided to an Employee page). The $500 exemption does not apply. 

For example, an automobile manufacturer that rewards a dealer directly, in cash or in kind, is not required to report the value of the reward on an RL-1 slip. If the dealer subsequently distributes the reward to their employees, the dealer has to file RL-1 slips for the employees and has to include the value of the employees' respective shares of the reward in boxes A and L and, where applicable, in box G or box I of the employees' RL-1 slips.

If the manufacturer rewards a dealer's employee directly, the manufacturer has to file an RL-1 slip in the employee's name and include the value of the reward in boxes A and L and, where applicable, in box G or box I of the slip. The $500 exemption cannot be applied to the reward.

Note

The cost of gifts and rewards is fully deductible in the calculation of your income, provided the amount is reasonable under the circumstances. This includes gifts and rewards that qualify for the $500 exemption.

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