Difference Between Rewards and Gift Cards When Recognizing Employees

August 31, 2017
recognition program, employees recognition, employees gifts, rewards employees, gift cards employees

Every company wants to be the most profitable, efficient and productive company in their industry. One of the largest contributing factors to whether your company achieves that goal is the employees that are working for you. Employees that are feel valued and satisfied in their position will be the hardest work, most productive workers. Employee Recognition Programs are a great way to ensure you are recognizing the hard work of your employees. There are many different ways to recognize good work, including awards, gifts and rewards. In this article, we will explain the differences between rewards and gift cards.

Gifts Taxable by the Government

When deciding which type of recognition program you want to implement, there are some significant financial implications that should be taken into account. Any gift or award given to an employee is considered a taxable benefit from their employment. However, the Canadian government does offer some exceptions. 

Gift cards may seem like the best option since they are quick and easy to purchase but can have unintended consequences for the receiver. When you give an employee a gift card, the Canadian government views it as a “near-cash” gift, or equal to cash. Therefore, the entire amount is taxable

The Best Choice: Rewards

Rewards are advantageous because an employer can give its employees an unlimited amount of non-cash gifts and awards without being taxed as long as the value is no greater than $500. 

If the annual amount exceeds $500, only the different would be taxable. For example, if you were to give an employee a total of $700 in rewards, he or she would be required to pay taxes on $200 of it ($700 total - $500 limit). 

Items that are considered trivial, such as company t-shirts, coffee or plaques are not included in the total value of gifts given to an employee.

In more, there are also special criteria when giving awards that recognize long standing service. Employers can give their employees a non-cash award at $500 or less once every 5 years to recognize an anniversary. 

A Recognition Program for Your Employees

If you are interested in implementing an employee recognition program but are unsure of how to begin, Williams Recognition has over 25 years of experience being one of Canada’s premier employee recognition program providers. Several programs are offered, including the Peer-to-Peer program and long service awards. Contact us today!

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