Social events and hospitality functions

Content has been updated for clarity, completeness and plain language.

The changes identified by the tags are effective January 1, 2022 and is identified with:

  • Update to CRA administrative policy
  • New CRA administrative policy

On this page

Determine if a 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 event, such as a holiday party, seasonal function, company picnic, or other social gathering.

What is a "hospitality function"

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 event, the benefit is not taxable if all of the following apply:

  • It is available to all employees
  • 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, refer to: Calculate the value of the benefit

Situation: Virtual social events you provide or reimburse to your employees New CRA administrative policy

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
  • 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, refer to: Calculate the value of the benefit

Situation: Hospitality functions you provide to your employees

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

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
    • virtual social event includes meals, beverages, delivery services and entertainment and is more than $100 (including taxes) per employee
Examples: Calculations for in-person or virtual social events (not combined)

The amounts must be included in the pay period they were received or enjoyed.

Examples: Calculations for in-person or virtual social events (not combined)
Description – For province of Ontario in the year 2022 Example 1 – in-person Example 2 – Virtual Example 3 – Virtual
Example 1 – The employer provided an in-person free holiday party to their employees and their spouses or common-law partners. The employer also provided hotel rooms for employees coming in from out of town. Example 1 is for an employee attending with their spouse.
  • 80 employees and 20 spouses attended the event
  • $135 (including taxes) per person total cost ($13,500/100 individuals)
    • $5,000 for conference room rental
    • $3,500 for a speaker
    • $5,000 per person for meals and beverages
  • $200 to cover the cost for overnight hotel stay (ancillary cost)
$135 (employee)
$135 (spouse)
$200 (ancillary cost)
- -
Example 2 – With the organization's move to remote work, the employer provided a virtual social event with entertainment in place of their usual in-person event. The employees and some of their spouses or common-law partners attended the event. The attending spouses will have no impact on the average value calculation since this is a virtual social event and therefore the calculation will be made on a per employee basis.
  • 75 employees and 25 spouses attended the event
  • $97 (including taxes) per employee total cost ($7,250/75 employees)
    • $3,750: $50 per employee for gift cards provided to 75 employees and not the spouses or common-law partners to cover the cost for meal, beverage and delivery service
    • $3,500 for a virtual motivational speaker
- $97 (per employee) -
Example 3 – With the organization's move to remote work, the employer provided a virtual social event with no entertainment. Only the employees attended the event.
  • 75 employees attended the event
  • $5,625: $75 per employee total cost for gift cards provided to 75 employees to cover the cost for meal, beverage and delivery service
- - $75 (per employee)
Non-taxable benefits - - -
Less than the limit - $270 ($135 x 2 persons) - $97 -
Hotel cost - $200 - -
Taxable benefits - - -
More than the limit - - = $75
Hotel cost - - -
HST (Ontario) – Included in non-cash taxable benefit - - N/A
Amount to be included on the employee's T4 (if applicable, includes the cost of the spouse or common-law partner) Not taxable Not taxable = $75
Amount of HST to remit (to be included in the GST/HST return that includes February 28 of the following year) - - = N/A
Examples: Calculations for combined in-person and virtual social events

The amounts must be included in the pay period they were received or enjoyed.

Examples: Calculations for combined in-person and virtual social events
Description – For province of Ontario in the year 2022 Example 1 – In-person Example 2 – In-person Example 3 – Virtual
Example 1 - The employer provided a combined in-person and virtual free holiday party to their employees and their spouses or common-law partners. The employer also provided hotel rooms to in-person attendees coming in from out of town. Example 1 shows the tax treatment for an employee and their spouse attending in-person with overnight hotel costs covered by the employer.
  • 65 employees and 20 spouses attended the event in person
  • 10 employees and 5 spouses attended the event virtually
  • $140 (including taxes) per person total cost ($14,000/100 individuals)
    • $5,000 for conference room rental
    • $3,500 for a speaker
    • $5,000 for catering for in-person attendees for meals and beverages
    • $500: $50 for gift cards to provide catering to employees only who were attending virtually attendees per person for meals, beverages and delivery services
  • $200 to cover the cost for overnight hotel rooms to employees who attended in-person (ancillary cost)
$140 (in-person, employee)
$140 (in-person, spouse)
$200 (ancillary cost)
- -
Example 2 – The employer provided a combined in-person and virtual free holiday party to their employees and their spouses or common-law partners. Example 2 shows the tax treatment for an employee and their spouse attending in-person with no overnight hotel costs.
  • 65 employees and 20 spouses attended the event in person
  • 10 employees and 5 spouses attended the event virtually
  • $165 (including taxes) per person total cost ($16,500/100 individuals)
    • $5,000 for conference room rental
    • $3,500 for a speaker
    • $7,500 for catering for in-person attendees for meals and beverages
    • $500: $50 gift cards for meals, beverages and delivery services provided to employees attending virtually
- $165 (in-person, employee)
$165 (in-person, spouse)
-
Example 3 – The employer provided a combined in-person and virtual free holiday party to their employees and their spouses or common-law partners. Example 3 shows the tax treatment for an employee who attended virtually without their spouse.
  • 65 employees and 20 spouses attended the event in person
  • 10 employees and 5 spouses attended the event virtually
  • $165 (including taxes) per person total cost ($16,500/100 individuals)
    • $5,000 for conference room rental
    • $3,500 for a speaker
    • $7,500 for catering for in-person attendees for meals and beverages
    • $500: $50 gift cards for meals, beverages and delivery services provided to employees attending virtually
- - $165 (virtual, employee)
Non-taxable benefits - - -
Less than the limit  $280 ($140 x 2) - -
Hotel cost  $200 - -
Taxable benefits - - -
More than the limit - = $330.00 = $165.00
Hotel cost - - -
HST (Ontario) – Included in non-cash taxable benefit - $35.36 ($330.00 x 12/112) $17.68 ($165.00 x 12/112)
Amount to be included on the employee's T4 (if applicable, includes the cost of the spouse or common-law partner) Not taxable = $165 = $165
Amount of HST to remit (to be included in the GST/HST return that includes February 28 of the following year) - = $35.36 = $17.68
 

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
  • Cash: Option 2

    Withhold:

    • Income tax
    • CPP
    • EI

    Remit:

    • GST/HST – Reimbursements
    • GST/HST – Allowances (do not remit)

Report the benefit on a slip

If the benefit is taxable, you must report the following 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

References

Related

Legislation

ITA: Section 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 Income Tax Act
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