On this page

• Determine if the benefit is taxable
• Calculate the value of the benefit
• Withhold payroll deductions and remit GST/HST
• Report the benefit on a slip
• References

Determine if the benefit is taxable

Depending on your situation, social events and hospitality functions you provide to your employees may not be taxable under the CRA's administrative policy .

What is a "social event"

A social event is where you provide a free party or other events, such as a holiday party, seasonal function, company picnic, or other social gatherings.

A hospitality function is where you provide a meal or other hospitality services at a work-related function that is not a social event. This includes events such as team-building lunches, motivational, planning, education, and networking sessions.

Situations

Situation: In-person (or combined in-person and virtual) social events you provide to your employees Update to CRA administrative policy

Non-taxable situation

Under the CRA's administrative policy, if you provide a free party or other in-person social events, the benefit is not taxable if all of the following apply:

• It is available to all employees (at an employer's place of business, which can mean a branch or division depending on the situation)
• Cost is $150 or less (including taxes) per person:
  • persons includes spouses or common-law partners
  • ancillary costs (such as transportation home, taxi fare, and overnight accommodation) for in-person social event attendees are not included in total cost limit for the event
• If you provide gift cards to your employees attending virtually for meals, beverages, and delivery services, the card must meet the conditions for the card to be considered non-cash
• The event is within the maximum annual limit for social events (total of six employer-paid combined in-person and virtual social events)

Taxable situation

If the social events you provide to your employees do not meet all of the conditions above, it is a taxable benefit.

If the total cost for the event (not including ancillary costs) is more than the limit per person, the full amount is taxable. Where the benefit is taxable, you must include ancillary cost and the cost of the attendance of the spouse or common-law partner in the income of the employee.

To calculate the benefit, go to Calculate the value of the benefit.

Non-taxable situation

Under the CRA's administrative policy, if you provide or reimburse for a virtual social event, the benefit is not taxable if all of the following apply:

• It is available to all employees (at an employer's place of business, which can mean a branch or division depending on the situation)
• If the virtual social event:
  
  • only includes meals, beverages and delivery services, the total cost is $50 or less (including taxes) per employee
  • includes meals, beverages, delivery services and entertainment, the total cost is $100 or less (including taxes) per employee
• If you provide gift cards to your employees for meals, beverages and delivery services, the card must meet the conditions for the card to be considered non-cash
• If you reimburse expenses or provide an accountable advance, the employee must send you receipts
• The event is within the maximum annual limit for social events (total of six employer-paid combined in-person and virtual social events)

Taxable situation

If the social events you provide to your employees do not meet all of the conditions above, it is a taxable benefit.

If the cost of the event is more than the limit per employee, the full amount is taxable.

To calculate the benefit, go to Calculate the value of the benefit.

If you provide a meal or other hospitality services, the benefit is not taxable if all of the following apply:

• It is part of a work-related event, such as a planning or education session, or a networking session
• The employer is considered to be the primary beneficiary of the benefit
• The event is not to celebrate the completion of a project or task, or a thanks for a job well done
• Each hospitality function has a reasonable cost

What is a CRA's administrative policy for the purpose of taxable benefits

Gift cards you provide to your employees that are considered non-cash

Cash

Near-cash

Non-cash

Calculate the value of the benefit

If the benefit is taxable, the value of the benefit is equal to the cost of the event received by the employee.

• In-person: Option 1

  You need to calculate the full amount if the cost of the:

  • in-person (or combined in-person and virtual) social event is more than $150 (including taxes) per person:
    • include ancillary costs
    • include the cost of the attendance of the spouse or common-law partner

• Virtual social event: Option 2

  You need to calculate the full amount if the cost of the virtual social event:

  • only includes meals, beverages and delivery services and is more than $50 (including taxes) per employee
  • includes meals, beverages, delivery services and entertainment and is more than $100 (including taxes) per employee

Withhold payroll deductions and remit GST/HST

If the benefit is taxable, you must withhold the following deductions. The amounts must be included in the pay period they were received or enjoyed.

The withholding and remitting requirement depends on the type of remuneration: cash , non-cash , or near-cash .

• Non-cash and near-cash: Option 1

  Withhold:

  • Income tax
  • CPP
  • EI (do not withhold)

  Remit:

  • GST/HST in certain situations

• Cash: Option 2

  Withhold:

  • Income tax
  • CPP
  • EI

  Do not remit:

  • GST/HST

Learn how to calculate deductions and the GST/HST to remit on benefits: How to calculate – Calculate payroll deductions and contributions.

Report the benefit on a slip

If the benefit is taxable, you must report the following amounts on the T4 slip.

• Non-cash and near-cash: Option 1

  Report on:

  • Box 14 – Employment Income
  • Box 26 – CPP/QPP pensionable earnings
  • Code 40 – Other Information

• Cash: Option 2

  Report on:

  • Box 14 – Employment Income
  • Box 24 – EI insurable earnings
  • Box 26 – CPP/QPP pensionable earnings
  • Code 40 – Other Information

Learn how to report the benefit on a slip: Fill out the slips and summaries – File information returns (slips and summaries).

References

Legislation

ITA: 6

Amounts to be included as income from office or employment

ITA: 6(1)(a)

Value of any benefit is to be included as income from office or employment

ITA: 6(1)(b)

Allowance for any purpose

ITA: 67

General limitation regarding expenses

ITA: 67.1(2)(e)

Exceptions to general limitation regarding expenses

CPP: 12(1)

Amount of contributory salary and wages

ETA: 173

Taxable benefit is considered a supply for GST/HST purposes

IECPR: 2(1)

Amount of Insurable Earnings

IECPR: 2(3)

Earnings from Insurable Employment

IECPR: 2(3)(a.1)

Earnings from Insurable Employment – amount excluded as income under 6(1)(a) or (b), 6(6) or (16) of the ITA