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Year-End Tips and Updates for Your Small Business

As 2022 is coming to a close, Clearly Financials would like to support local small businesses in the Edmonton Area with some year-end tips and updates.




*NEW* CRA Administrative Policy on Gift Cards

Did you know that you may be able to give gift cards to your employees, without the employee incurring income tax on the gift?


Prior to January 1, 2022, the CRA considered gift cards to be near-cash items. As a result, giving a gift card to an employee resulted in the employee needing to pay income tax (roughly 25% to 49% in Alberta), Canada Pension Plan (CPP) contributions, and Employment Insurance (EI) premiums on the amount of the gift card.


Effective January 1, 2022, the CRA details a new administrative policy on gift cards given to employees that may categorize the gift cards as non-cash, and therefore non-taxable.


This means that a $150 gift card could provide more value to the employee, compared to a $150 cash bonus.


For Gift Cards or Gift Certificates to be considered non-cash, the following criteria must be met:

  • Money is already loaded;

  • The card can only be used for a single retailer or group of retailers identified on the card;

  • The card clearly states that amounts loaded cannot be converted into cash;

  • A log of information is recorded, including:

o Name of the employee

o Date the gift card was given to the employee

o Reason for the gift card (part of a social event, gift or award)

o Type of gift card

o Amount of the gift card

o Name of the retailer(s).


This administrative change will make it easier for employers to give their employees a “thank-you” this holiday season.


Visit the CRA's page on Gifts, awards, and long-service awards for more information.


For more information on non-taxable gifts and awards to employees, read the next section of this blog post.

 

Non-Taxable Gifts and Awards to Employees


The previous section outlined changes to the way Gift Cards given to employees are treated for tax purposes. Let's explore other rules surrounding non-taxable gifts and awards to employees.




Cash, or near-cash, gifts or awards given to employees are generally taxable. Near-cash items include items that are easily converted to cash (precious metals or jewels, bonds, and securities), prepaid credit cards, and digital currency (electronic money).


You can give your employees non-taxable gifts and awards up to $500. This means that the employee will not be required to remit tax, CPP, or EI on the gift or award, which increases the value to the employee.


What is permitted:

  • An unlimited number of gifts or awards up to $500 per year. Do not include trivial items such as t-shirts and mugs.

  • Gifts – for special occasions such as birthdays and holidays.

  • Awards – for employee’s overall contributions to the workplace.

  • Not for rewards that are specifically related to job performance.

What is not permitted:

  • Gifts or awards to non-arms-length employees. Gifts to family members are taxable.

  • Cash or near-cash items, including precious metals, prepaid credit cards, and digital currency.

  • Long-service awards. There is a separate set of rules for long service.

  • Rewards relating to job performance.

  • Gifts and awards that are provided through a prize draw or lottery.


Visit the CRA's page on Payroll deductions and contributions for more information.

 

Important Payroll Timelines for the Calendar Year-End

We highly recommend using payroll software for small businesses with employees. Due to holiday closures, there are critical timelines to be aware of at the end of the calendar year. If you are using one of the more popular payroll software options, Wagepoint of QuickBooks online, important deadlines follow.

Payroll Timelines for Wagepoint

  • December 23, 2022 - Last date to process a direct deposit payroll for a pay date in 2022.

  • December 28, 2022 - First date to process a direct deposit payroll for a pay date in 2023.

  • December 30, 2022 - Last date to process a manual payroll for a pay date in 2022 and issue paper cheques to pay employees.

  • January 03, 2023 - Your T4, T4A and RL-1 reports for 2022 will be available for review in Wagepoint. You can begin submitting your forms to the government right away.

  • February 19, 2023 – Last day to make any changes to your tax documents, as well as changing your auto-submit setting for year-end forms if you don’t want Wagepoint to submit them on your behalf.

  • February 20, 2023 - T4s, T4As, RL-1s, T4 summary, and T4A summary reports will be submitted to the CRA/RQ via Wagepoint’selectronic bulk submission process on your behalf if auto-submit setting is set.


Payroll Timelines for QuickBooks Online

  • December 21, 2022 - Last date to approve payroll for pay dates December 23 to 27, 2022.

  • December 22, 2022 - Last date to approve payroll for pay date December 28, 2022.

  • December 23, 2022 - Last date to approve payroll for pay date December 29, 2022.

  • December 28, 2022 - Last date to approve payroll for pay dates December 30, 2022, to January 2, 2023.

  • December 29, 2022 - Last date to approve payroll for pay date January 3, 2023.

  • December 30, 2022 - Last date to approve payroll for pay date January 4, 2023.

  • January 01, 2023 - T4s and RL-1s are available in QuickBooks Online Payroll.

  • January 04, 2023 - Electronic filing options are available online with Canada Revenue Agency and Revenu Québec.

  • February 28, 2023 – Last day to export your T4 file from QuickBooks Online Payroll and submit T4s and RL-1s with CRA and Revenue Quebec.

 

Odometer Readings


CRA requires you to track mileage if you claim automotive expenses for your small business. Please remember to take a snapshot of your odometer reading on the last day of the year, December 31.

 

Inventory Count


If you have a sole-proprietorship or a corporation with a fiscal year ending December 31, please remember to take stock of your inventory on December 31.

 

Holiday Closure


Please be advised that our office will be closed for the holidays

from December 23rd, 2022 to January 3rd, 2023.



 

Disclaimer

This blog post is a summarized version of complex matters that are rapidly changing. The preceding information is provided for general, educational purposes only. Speak with one of our team members if you have any questions about your specific accounting or tax situation.

 
Clearly Financials Chartered Professional Accountants. Cloud-Based Accounting and Taxation Solutions for you and your small business.

Clearly Financials offers Smart Accounting and corporate tax services to small businesses in Edmonton, AB. We provide a full suite of services including: Bookkeeping, Payroll, GST filing, Notice to Reader Financial Statements, and Corporate Tax Returns.


We enjoy helping small business owners get set up and hit the ground running. We offer Business Foundation Services which include business plan creation and business structure selection (e.g. to incorporate a business, or operate as a sole-proprietor).


Our Business Performance Management services help small business owners grow their companies, and their profits through goal-setting, budgeting and forecasting.


Our office is located in Old Strathcona in Edmonton, Alberta.

Book an appointment today through our convenient online scheduler.

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