Scrooge would approve — 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, according to a survey released by H&R Block Canada.
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 attending the 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, said H&R Block.
Most of the 1,503 survey respondents were not aware 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:
•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 one-half of Canadians (48 per cent) incorrectly believed 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 (such as tickets to a show or hockey game) could be a taxable benefit. Quebec residents were the most likely to believe these prizes are not taxable (70 per cent).
•Residents of Ontario, Quebec and the Atlantic Provinces and younger Canadians (18 to 34 years old) were more likely to believe cash bonuses are not taxable income.
© Copyright Canadian HR Reporter, HAB Press. All rights reserved.