The Income Tax Act requires that the value of all benefits be included in employment income and taxed accordingly. However, there are some provisions of the Income Tax Act and some administrative practices that may allow for tax-free payments.
Non-Cash Awards – If your employer provides you with on-cash gifts for say, birthdays, Christmas, or for a wedding, then the value of those benefits are to be included in your income. In the past, the CRA has adopted an administrative practice that allowed for up to 2 non-cash gifts per year provided the total of these gifts did not exceed $500.
The CRA has changed its policy for 2010. The new policy does not limit the number of non-cash gifts, but rather establishes a general exclusion of up to $500 per year.
Discounts & Meal Subsidies – If your employer offers a discount on merchandise or services, these are considered tax-free benefits. Similarly, if your employer offers subsidized meals, the value of the subsidy is not considered taxable.
Death Benefits - If your employer makes a payment to your spouse or children in recognition of your death, then the value of these payments are tax exempt up to $10,000.
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The best of these ‘deals’ is obviously to die while working for an understanding employer.
What I wonder is are these benefits still allowed if you are your own or your wife’s employer (with an incorporated business)? I never knew about the death benefit, that’s a nice little tax free insurance policy for any small business owner.
@ Jordan – I didn’t look at non-arms lenght transactions with respect to these types of benefits. At first blush it would appear that the gift & the death benefit “may” be used if it were generally available to other employees. Although, I can’t say for sure.