P’s employer provided her with the following gifts and awards: Wedding gift (cutlery) − $400; Holiday season gift (art) − $300; Excellence award (gift certificate) − $250; First long service award for 10 years of service (golf clubs) − $1,200. What amount is included in P’s employment income for tax purposes?

In Canada, the tax rules for gifts and awards provided by an employer are as follows:

1. Non-cash gifts and awards with a total value of $500 or less in a year are not taxable. If the total value is more than$500, the amount over $500 must be included in the employee's income. For example, if an employee receives non-cash gifts and awards with a total value of$650, there is a taxable benefit of $150 that must be included in the employee's income.

2. A separate $500 non-taxable limit applies to non-cash long-service awards given to an employee who has worked for the same employer for at least 5 years. The award must not be for performance-related reasons. If the cost of the long-service award is more than$500, the excess amount must be included in the employee's income. For example, if the cost of the long-service award is $650, there is a taxable benefit of$150.

3. Cash gifts or near-cash gifts like gift cards are always considered a taxable benefit for the employee.

In P's case:

• The wedding gift (cutlery) worth $400 and the holiday season gift (art) worth$300 are non-cash gifts. The total value of these gifts is $700, which is$200 over the $500 limit. Therefore,$200 must be included in P's income.

• The excellence award (gift certificate) worth $250 is a near-cash gift, so the full$250 must be included in P's income.

• The long service award (golf clubs) worth $1,200 is a non-cash gift. Since this is P's first long service award and she has been with the company for 10 years, a separate$500 limit applies. The value of the award is $700 over the limit, so$700 must be included in P's income.

In total, P must include $1,150 ($200 + $250 +$700) in her employment income for tax purposes.