MCPA – McGowan Chartered Professional Accountant wishes you and your family a blessed and wonderful Holiday Season, and a happy, healthy, and peaceful New Year 2019!
Our office will be closed from Friday, December 21, 2018, from 3:30 pm, for our Staff Party. We will re-open after the holidays on January 2, 2019.
We would like to remind our clients of the taxation rules on staff gifts and parties since it is the season for company parties and year-end bonuses. So if you’re a small business owner and are planning a get together for your employees to celebrate the season, and need to know what is deductible and a taxable benefit, here is the scoop:
a. Staff Parties: Generally, only 50% of meals and entertainment costs are deductible as business expenses. There are a few things you can do to make that deduction 100%. The main requirement is inclusivity, meaning that the event must be open to all employees. Also, the cost of the event cannot exceed $100/person which does not include the extras.
b. Cash Gifts/Gift Cards: Cash like bonuses and gift cards which are considered ‘like cash” are always taxable meaning they have to be added to T4’s and have deductions like regular income. What many people are doing, is gifting items rather than cash. If you purchase presents and gift items then so long as the total of those types of gifts for the year doesn’t exceed $500, the company can deduct the full amount and the employees will not be taxed on the gifts. Anything over the $500 a year would be treated the same as cash or bonuses.
For more information about deductibles and taxable benefits, or if you need any assistance from us during the holiday season, feel free to get in touch with us by clicking here.