Updated: November 23, 2023

Whether for staff or customers, these holiday appreciation ideas will serve your small business well.

Is it a Holiday Appreciation Gift for Tax Purposes?

When thinking about bonuses or gifts for your team, you need to consider whether what you’re giving them is a taxable benefit. It’s important to run bonuses through your payroll system to ensure that source deductions are appropriately accounted for. Bonuses for your team shouldn’t result in extra work due to a surprise tax bill for your team.  

Cash or gift cards and other investment-related items, such as stocks or commemorative gold coins, are almost always taxable benefits. Keep that in mind when deciding what to give.

Non-cash gifts are not taxable as long as they are under the annual limit of $500. Tickets to an event, gift certificates for a specific service (such as a massage) or a tangible item (such as a bottle of wine) would fall into this category. Canada Revenue Agency (CRA) currently includes gift certificates for movie theatres as a taxable benefit.

One of the key determinants of the taxable nature is it is a gift or reward. Gifts are tied to special occasions such as holidays, work anniversaries, etc. Rewards are always taxable, even if they aren’t in cash or near-cash, and even directly result from your team member’s performance.

It’s important to know your team and to understand what would be a good gift for them and what wouldn’t be. It’s also important to be sensitive to our diverse culture and avoid accidental offences. For instance, giving a bottle of wine to someone who doesn’t drink isn’t a great idea.

Customer Holiday Appreciation

This is the time of year when everyone, including your customers, appreciates being appreciated.

Whether you’re sending cards, gift cards or giving physical gifts, this is a great time to show that you know your customers. Again, being sensitive and showing you know your customers is important. I once made the mistake of giving a nice bottle of sake to a pregnant woman – talk about being insensitive!

Another thing to keep in mind is that you need to be able to show the Canada Revenue Agency to whom the gift was delivered and provide their contact information. It’s best to do this directly on the receipt, but a schedule outlining the gifts purchased and who they went to is also acceptable.

Many business owners try to get away with buying many gift cards and saying they are gifts, but not tracking where they go and keeping several to use. CRA has caught onto this, which can be an area where business owners find themselves in hot water.

Be Sensitive About Holiday Appreciation

With Canada’s diverse culture, it’s more and more important to celebrate our differences and to understand your team and your customers. For quite a while now, the world has been using the term holiday season instead of Christmas, which is appropriate.

Many holiday appreciation ideas and traditions are celebrated this time of year; recognize them. It’s important not to alienate people or make them feel otherwise excluded accidentally with your holiday celebrations.

Plan Your Holiday Party with Guests in Mind

Similarly, when planning holiday parties, it’s important to consider your team’s dietary and family needs. Set a budget and stick to it. Are you inviting children? Will Santa be making an appearance? Or is it adults only?

With this season, things will likely remain quite restricted, with many people being uncomfortable going to public places for events. If you are taking your team out for a meal, ensure it’s appropriate. It’s insensitive to take a vegan to a steakhouse.