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CRA Gift card policy changes and impact to taxable income

by Intuit Updated 5 months ago

Under a new CRA administrative policy, if you provide your employee with gift cards, the gift card may be considered a non-cash gift which is a non-taxable benefit in certain situations and should not be included as income on the employee's T4 slip.

This change is retroactively in effect for January 1, 2022.

You can find more information on this change by reviewing the CRA article Gifts, awards, and long-service awards.



Track non-taxable gift cards

Step 1: Set up a Reimbursement pay type to use and name it “Non-taxable Gift Cards”

  1. Identify the employee that received the gift card.
  2. Select Edit under Pay types.
  3. Select the option Non-taxable Gift Cards under Another Reimbursement type.

Step 2: Set up an after-tax deduction named “Gift Card Offset” to remove the reimbursement amount and ensure the employee doesn’t get extra money added to their paycheque

  1. Identify the employee that received the gift card.
  2. Select Edit under Deductions and contributions.
  3. Select Add deduction/contribution.
  4. Select Other deductions.
  5. Select Other after-tax deductions.
  6. Enter the name Gift Card Offset.
  7. Set the deduction as a Flat amount and enter a value of $1 for Amount per paycheque. Note that this amount will have to be adjusted to match the gift card amount when creating the paycheque to offset.

Step 3: Create a paycheque and enter the gift card amount as both a reimbursement and deduction so the amounts offset creating a $0 paycheque to track

Since this change is retroactive to January 1, 2022, if you provided your employees gift cards that fall under non-cash gift, please contact support and request a pay edit to have the employees income, CPP and EI adjusted.

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