The Income Tax Act requires that the value of all benefits be included in employment income and taxed accordingly. However, there are some provisions of the Income Tax Act and some administrative practices that may allow for tax-free payments.
Non-Cash Awards – If your employer provides you with on-cash gifts for say, birthdays, Christmas, or for a wedding, then the value of those benefits are to be included in your income. In the past, the CRA has adopted an administrative practice that allowed for up to 2 non-cash gifts per year provided the total of these gifts did not exceed $500.
Discounts & Meal Subsidies – If your employer offers a discount on merchandise or services, these are considered tax-free benefits. Similarly, if your employer offers subsidized meals, the value of the subsidy is not considered taxable.
Death Benefits – If your employer makes a payment to your spouse or children in recognition of your death, then the value of these payments are tax exempt up to $10,000.