RAD 403

1

• RAD 403
• Gifts, Incentives and Honoraria
• Wendy Sereda, Manager-Staff and Student Payments
• 100 215 pm
• June 2, 2009

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What is a Gift?

• A gift is for a personal celebration or a
  milestone event in an employees life not related
  to their employment.
• ExamplesBirthday, wedding, childbirth,
  Christmas or retirement

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Types of Gifts

• Cash and Near Cash Gifts
• Non-Cash Gifts

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Cash and Near-Cash Gifts

• A near-cash gift is any item that can be easily
  converted to cash or that has a cash equivalency.
• These gifts are considered cash and are therefore
  taxable.
• Example 100 gift card or gift certificate
  which the employee can spend at a specific store
  or restaurant.

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Non-Cash Gifts

• A non-cash gift is any item which cannot be
  converted to cash.
• Employers may provide up to two non-cash gifts in
  a taxation year on a tax-free basis, provided the
  value of the two gifts, including taxes, is 500
  or less.
• The employer must purchase the item for the
  employee.
• Examples
• Movie passes must be limited to the movie
  entrance only
• Tickets to a specific event (e.g. sporting,
  theatre, musicals)
• Voucher for a specific item (such as a turkey for
  Christmas)

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What is an Award?

• An award is in recognition of employment
  achievements.
• Not to be confused with rewards for jobs well
  done.
• Example
• Reaching a set number of years of service
• Meeting or exceeding safety standards
• Reaching similar milestones

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Types of Awards

• Cash or Near-Cash Awards
• Non-Cash Awards

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Cash or Near-Cash Awards

• Cash or a near-cash award is any item that can be
  easily converted to cash or that has a cash
  equivalency.
• These awards are considered cash and are
  therefore taxable.
• Example 100 gift card to which the employee
  can spend at a specific store or restaurant.

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Non-Cash Awards

• A non-cash award is any item that can not be
  converted to cash.
• Employers may provide up to 2 non-cash awards in
  a taxation year on a tax-free basis, provided the
  value of the two awards, including taxes, is 500
  or less.
• Not to be confused with rewarding employees for
  a job well done.
• ExampleLong service, outstanding service, or
  exceeding safety standards.

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Rewards

• Rewarding employees with gifts or awards for
• Excellent work
• Exceeding targets
• Bringing projects in under budget and ahead of
  schedule
• A thank you for a great job
• Employee of the month
• These gifts and awards are taxable because you
  are rewarding the employee for a job well done.

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Honoraria

• Means monetary payment given to a person for
  services for which fees are not traditionally
  required. The amount is not normally
  representative of the fair value of the
  contribution.
• Honorarium payments may be considered taxable
  income under the Income Tax Act of Canada.
• Honoraria are reported on year end slips (T4 and
  T4As).

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• Honorarium Payment to a University employee
• The payment is considered to be employment income
  and is included on the T4 slip
• Honorarium Payment to a non-employee and Canadian
  resident
• The payment is considered to be other income, no
  tax is deducted and a T4A slip is issued

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Prizes

• When an employer provides a prize to an employee
  related to sales or other work performance, the
  fair market value of such an incentive is
  regarded as remuneration for services, therefore
  it is taxable.
• Any prize that is recognized by the general
  public for meritorious achievement in the arts,
  sciences or service to the public is called a
  Prescribed Prize and is not taxable.
• Examples
• Nobel Prize given to a scientist
• Governor Generals Literary Award
• Community Service awards