Under the Quebec Taxation Act, gifts and awards follow similar principles to the federal requirements with two main differences:
The first difference is that under Revenu Québec’s legislation, there are two separate $500 annual exemptions that can be used, one for gifts and a second for awards. However, the CRA allows for one $500 annual exemption for both gifts and awards.
Secondly, an employee in Quebec who is given a gift card specifying the name of the merchant, provided in recognition of a special occasion or as an award for an accomplishment such as meeting safety standards, will not be taxed on amounts of $500 or less. On the other hand, the CRA does not accept the gift card under their annual exemption policy and is therefore fully taxable.
Both Revenu Québec and the Canada Revenue Agency (CRA) consider gifts and awards to be employment income except when non-cash gifts under $500 are provided to recognize an occasion or accomplishment.
Gifts that fall outside of Revenu Québec and CRA’s gift and award policy are taxable and subject to Q/CPP and Income taxes. If the gift or award is provided in cash, it is subject to Q/CPP, EI, QPIP, and Income taxes.
Taxable gifts and awards are reported on the RL-1 in boxes A and L and on the T4 in box 14 and code 40.