Instead of the ubiquitous — and taxable — gift card or gift certificate, get creative and give arm’s-length employees non-taxable holiday gifts, which include:
- non-cash gifts and awards with a total aggregate value less than $500 annually
- non-cash long-service or anniversary awards of $500 or less; to qualify, the award cannot be for fewer than five years’ service, and five years must have passed since the employee last received such an award (performance awards are taxable to employees)
- gifts of nominal value (coffee, T-shirts and mugs, for example)
The amounts paid for these gifts can be deducted as business expenses.
Business owners should also keep a logbook to support the business use of a vehicle. Follow CRA’s guidance on documentation, which allows the option to establish the business use of a vehicle in a base year and then keep detailed records for only one three-month period in subsequent years.
For those who owe a debt to their corporation, it must be repaid within a year following the end of the corporation’s taxation year in which the loan was made. There are exceptions, so it’s best to review the tax consequences with a tax advisor, suggests the Grant Thornton guide.
Employed tradespeople may be entitled to a tax deduction of up to $500 for new tools required for employment (not applicable for most electronic communication devices and electronic data-processing equipment).
For 2016, the deducted amount is the amount by which the cost of the eligible tools acquired in the year exceeds $1,161 (up to $500). For tradespeople who haven’t yet hit that threshold, planned purchases should be acquired before year-end. Apprentice mechanics also are eligible for their own specific deduction for new tools.
Read Grant Thornton’s full year-end tax-planning guide here.
Also read: Essential tax numbers