Most of us have experienced the last minute shopping rush for the Christmas season and make a vow that next year we will get our shopping done early. Sticking with this plan can help with more than just avoiding the crowded shopping malls and disappointments of sold out items.
Many business owners like to acknowledge some of their employees at this time of year and will do so with gifts. This really is a wonderful gesture but can have some tax implications for both the employer and employee.
Basically the CRA has made some concessions with gift gifting for two occasions per employee per year, however these must be special occasions like Christmas or Hanukkah. A gift can also be given to commemorate a special life event like a birthday, or birth of a child. In any case the gift cannot exceed $500. for each of the two allowable events. It doesn’t necessarily mean a cash gift either, but can include items like gift cards for example. Being an employer makes a decision to give gifts they should review the tax regulations concerning this. The same applies for the employee receiving the gift.
Outside of the business tax, the personal tax payer must also be careful with the giving of gifts especially if it is property if they happen to be in arrears with their taxes. Again one is well advised to check the CRA rules when in this situation.
After understanding what the tax implications can possibly be for the gift giving season there are other things to keep in mind when doing the shopping. A lot of people are on a budget and having to buy gifts can put a real strain on them financially.
Here are some shopping tips that might help lift some of the holiday shopping burden.
- One way to help reduce the burden is to really review the Holiday shopping list and see if it can be cut down. We get into the habit of buying for the same people year after year, even if we don’t have a close relationship with them throughout the year.
- You could also set some gift buying rules for yourself. Perhaps have a cut off age where you stop buying for children outside of your immediate family. For example, when they become sixteen.
- Or consider buying one gift that is useful for the entire family instead of each individual.
- Set a price cap on each gift that fits in with your budget.
- Consider drawing names amongst the family members. This way each person get one nice significant gift instead of a lot of small gifts that they might not use.
If you are concerned about tax implications during this shopping season be sure to discuss your gift giving plans with your accountant.