And most don't realize that their party may be considered a taxable benefit
CALGARY, Nov. 20, 2013 /CNW/ - Scrooge would approve. According to a recent survey by Leger for H&R Block Canada, only 44 per cent of Canadians are expecting their employers to host a holiday party this year, and only 17 per cent are looking forward to holiday bonuses.
Canadian employers may not be handing out holiday bonuses but even when they do, employees do not always realize there may be tax implications for receiving the extra cash or even attending their holiday parties. Employers are allowed to give employees a maximum of $500 in non-cash gifts over the year before taxable benefits kick-in. For employees who receive more than $500, their tax withholding should be increased to cover the taxable benefit amount or they may be facing a bill at tax time.
While 44 per cent of Canadians were expecting a staff holiday party, most were not aware that their staff holiday party could be considered a taxable benefit, if it's lavish enough. If the cost of the party exceeds $100 per person excluding transportation and accommodation, then the party is considered a taxable benefit and the per person cost included on an employee's T4 slip.
Other survey highlights included:
- Most Canadians (72 per cent) understood that cash bonuses are considered taxable income.
- Only 10 per cent knew that employer-hosted parties are considered taxable benefits if the cost per person exceeds $100 excluding transportation and accommodation.
- Almost half of Canadians (48 per cent) incorrectly believed that employee rewards such as gift cards or other cash-equivalents are not taxable.
- Fifty-nine per cent did not realize that winning an employer-sponsored draw for a prize (e.g. tickets to a show, hockey game) could be a taxable benefit. Quebec residents were the most likely to believe that these prizes are not taxable (70 per cent).
- Residents of Ontario, Quebec, and the Atlantic Provinces and younger Canadians (18-34) were more likely to believe that cash bonuses are not taxable income.
"Most Canadians don't realize that any gift from an employer over a certain value, whether it's tickets to a hockey game, a vacation, or a big holiday party could be a taxable benefit," says Cleo Hamel, Senior Tax Analyst, H&R Block Canada. "Once you exceed the $500 non-cash limit, everything above that is reported on your T4, so if your employer offers a gift of expensive tickets that you know you won't use, you might want to politely decline."
The survey was completed online from November 4 to November 7 using Leger's online panel, LegerWeb, with a sample of 1,503 Canadians 18 years of age or older.
About H&R Block Canada
H&R Block Canada has been preparing taxes for more than 49 years and is Canada's leading tax preparation firm. Headquartered in Calgary, Alberta, the company serves Canadian taxpayers in more than 1,100 offices across the country. H&R Block Canada Inc. is a subsidiary of H&R Block, Inc., a diversified company with subsidiaries providing a wide range of financial products and services. Additional information about H&R Block Canada is available at 1-800-HRBLOCK or hrblock.ca. Visit www.hrbtaxtalk.ca for more tax tips.
A probability sample of the same size would yield a margin of error of +/- 2.5%, 19 times out of 20.
SOURCE: H&R Block Canada Inc.
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