JENNIFER HALEY, CPA
Hi there, I'm Jennifer Haley, CPA. I'm here to help business owners get a handle on their finances so they can get back to doing the things they love.
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🎄✨Another challenge to support local when gifting to employees ✨🎄
Did you know that if you gift your employees cash or gift cards at Christmas time, you are creating a taxable benefit for them (meaning they will have to pay tax on the amount you gift!)
Any gift that is cash, near cash, or non cash is a taxable benefit to employees. However CRA has created a policy which allows employees to receive certain gives for certain holidays/events without creating a taxable benefit.
So let's first discuss the 3 types of gifts that are in the policy so you have an understanding how each play out.
To give another example, a movie voucher would be considered near cash as the employee can go see whatever movie they choose. However if you give them a ticket to one specific movie at a designated time, this would be considered non cash.
Now, when does a gift become a taxable benefit for the employee and when are the situations that it is not?
Let's get the cash and near cash gift out of the way first...if you gift an employee cash or near cash, regardless of the reason or amount it is taxable to your employee. You must add the amount to their T4 at the end of the year. There are no exceptions to this.
The rules change however when you are gifting something that is non-cash.
You are able to gift an employee non-cash items under a total value of $500 for special occasions like a religious holiday, birthday, wedding, or birth of a child.
The $500 total is for the entire year, so you can gift an item valued at $500 for each event, it is the combined total. if you gift anything above and beyond the $500 it would then become a taxable benefit for the employee. However only the amount beyond the $500 would be a taxable benefit (Gifted items valued at $650, $150 becomes a taxable benefit).
The $500 value is also based on fair market value, which means if a supplier gifted you an item (costing you $0) and you in turn gifted it to your employee (let's say it is a coffee pot that retails at $200) then you have gifted your employee $200 in value.
Items of small or trivial value are not included in this totals, these would be items such as:
I hope this little explanation helped you understand the gifting policy with CRA and you are well equipped to buy your employees gifts without creating a taxable benefit for them 🎅
For more details on the policy you can visit the CRA website at:
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🎶 It's the most wonderful time of the year 🎄🎁
But with the most wonderful time of the year, often comes as the most stressful time of the year for most; mentally and financially.
The first thing you need to do before anything else during the holiday season is put together a HOLIDAY BUDGET 🗒️ 💵 it is an absolute must!
Most of us do put a budget together, but it usually only includes amounts for gifts. We usually forget to include the other things that can end up costing just as much as the gifts, like decorations, food for holiday dinners, snacks for the get togethers, holiday attire and beverage for the parties, and donations to local charities.
So how do you put together a budget? Follow along these steps and you will come out with a full proof budget:
After you have created your budget you might realized you don't have the available funds to cover it, you may need to look at going into debt for Christmas. We always want to plan and avoid this from happening, but we need to be realistic and often debt is inevitable during the holidays (and trust me, you aren't alone!).
The worst thing to do and what we must avoid is saying, "Ahh screw it, I can't afford Christmas so I am just going to have a good time and spend as I want and not keep track of it." Trust me, this mind frame will put you in debt further than you except or will be prepared for.
BUT what we NEED do is control the debt. If we know ahead of time the debt we will need to create, we can manage it throughout the holidays bu sticking to our budgets and lists and after the holidays we won't be in shock and can then build a plan to manage this debt.
And this is called being financially responsible (YAY!).
So even if your holiday budget puts you in debt, stick to it! You will be thankful after the holidays when you open your credit card statement and see exactly what you were expecting and have a plan to manage it!
Happy Holiday Financial Responsibility!
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The only advice you will EVER need when starting or running your business is you MUST open a bank account that is completely designated for business; and separate from your personal account!
I mean if you want to get me going, I’d actually suggest to open at minimum 4 accounts, but I'll get to that on another post, and 1 is a VERY positive start!
I see a lot of people running their business and personal finances through one account, and trust me, it just doesn’t work!
You cannot properly manage your cashflow and the success of your business if you are needing to dodge around grocery, entertainment, medical, and all other personal expenses.
Cashflow is an essential part of our businesses, its honestly the blood line. So when you have business and personal all mixed together you will properly often need to go for transfusions (see what I did there...). When it is together, how do you know when you buy groceries you are taking away from the cash to pay for you business insurance, or when you buy office supplies are you taking away from your mortgage payment?
You will always feel financially overwhelmed and stressed because you will be relying on that brain of yours to keep track of everything happening. I don't know about you but just no thanks!
Canada Revenue Agency
And if the cashflow reasoning wasn't enough, CRA headache should be all you need. If you are selected for an audit and CRA asks for your bank statements (and they will) they are going to make you categorize each expense within your account to state if it is personal or business. And then when there is an expense that crosses over (for instances Home Depot) you bet they are going to ask for the receipt.
How much easier would it be to hand over a statement and say, EVERYTHING is business, done, no more explanation.
You really need to trust me on this one, separate those funds! It will save yourself SO much hair; it won't be falling out from stress and your won't be pulling it out because you are confused and there is so much going on.