Principal Issues: [TaxInterpretations translation] Clarification is requested regarding the CRA policy regarding non-monetary gifts and awards given to an employee.
Position: See the responses below.
Reasons: CRA Administrative Policy
FEDERAL TAX ROUNDTABLE
APFF CONFERENCE 2010
Question 38
Taxable benefits and $100 limit per event
The CRA's policy on non-monetary gifts and awards given to an employee was recently updated in Income Tax Technical News No. 40 (footnote 1). That document does not contain any updates with respect to the value of the benefit of any social functions or events. The policy with respect to social functions and social events continues to be as stated in paragraph 9 of IT-470R (footnote 2), as referred to in Response 7 in the Employment Benefits section of Income Tax Technical News No. 22 (footnote 3). Could the CRA provide the following clarification with respect to social functions or other social events?
Questions to the CRA
(a) Can you confirm whether the $100 limit stated in paragraph 9 of Interpretation Bulletin IT-470R is a per-event limit?
(b) Does this limit apply per person or per employee (where spouses are invited)?
(c) Does the $100 limit include the GST/QST paid by the employer?
(d) Does the CRA plan to increase the $100 limit to reflect inflation and economic reality?
CRA Response
(a) Where an employer provides a social event or other social activity free of charge to all employees, CRA's policy is that there is no taxable benefit to be included in the income of the employees if the cost per employee for the social event or activity does not exceed $100. The CRA confirms that this is a limit per event and that it is possible that more than one event per year offered by the employer to be covered by this policy. Of course, the number of events to which this policy is applied must remain reasonable in the circumstances.
(b) Where the party or social event is open to all employees and their spouses, the average cost of $100 will be based on the total number of guests and not just the number of employees.
(c) The $100 limit is an average that is based on the total amount paid by the employer for the function or social event, including room rental, food and entertainment expenses. Therefore, it is necessary to include the GST/QST paid by the employer in the calculation of the average cost of the evening.
(d) Currently, the CRA does not intend to revise or increase the $100 amount.
François Bordeleau
(613) 957-8972
October 8, 2010
2010-037345.
FOOTNOTES
Due to our system requirements, footnotes contained in the original document are reproduced below:
1 CANADA REVENUE AGENCY, Income Tax - Technical News No. 40, June 11, 2009, para. 9.
2 CANADA REVENUE AGENCY, Interpretation Bulletin IT-470R, "Employees' Fringe Benefits", August 11, 1999, para. 9.
3 CANADA REVENUE AGENCY, Income Tax - Technical News, "Employment Benefit" No. 25, October 30, 2002, question 7.