EMPLOYEES
GIFT AND RECOGNITION EXPENDITURE POLICY
1.
PURPOSE AND SCOPE 1.1
2.
3.
This policy provides interpretation on the acceptable use of public funds when recognizing the dedication of employees and non-employees at the University of Lethbridge. This policy applies to all University administered funds. If restricted funds are used, departments must ensure the expenditures are in compliance with the restricted funds terms and conditions.
DEFINITIONS 2.1
Gift – an item purchased for an individual in recognition of a special, unfortunate or celebratory event.
2.2
Employee - The determination as to whether an individual is an “employee” or “non-employee” is addressed in the Tax Guide for Paying Canadians.
2.3
Gift/Recognition form – See Appendix A - to be completed and submitted to Financial Services for each taxable gift given to an individual.
2.4
Taxable gifts – Gifts that result in employment income (T4) or other income (T4A) to the individual recipient as determined by Canada Revenue Agency (CRA) regulations.
2.5
Trivial gifts – Gifts that do not result in employment income as determined by CRA regulations. Examples include beverages, mugs, T-shirts with employer logos and plaques or trophies. The University of Lethbridge also includes gifts for individuals participating in research activities (such as trials and surveys) including gift certificates or cash, provided they are under $50 per individual per instance.
2.6
Non-cash gifts – a gift that is not cash or near-cash, such as a gift certificate or gift card.
POLICY 3.1
Qualifying expenses for gifts and social functions may be charged to University funds. For social functions refer to the Hospitality Expense Policy.
3.2
Social functions require advanced authority, either as a clear condition of the position held (senior administration) or from a Dean or Executive Director, prior to incurring the expense.
3.3
Expenditures charged to a restricted fund must comply with the restricted fund’s terms and conditions.
AUTHORITY:
RESPONSIBILITY:
EFFECTIVE DATE:
Board of Governors
Vice-President (Finance & Admin)
December 16, 2010
•
Supersedes the Employee Recognition Expenditure Policy dated Jan 24/07
•
RELATED POLICIES: Alcohol Policy; Conflict of Interest Policy; Employee Ethical Conduct Policy; Finance/Budget Approval and Signing Authorization Policy; Employment and Contracted Policy; Hospitality Expense Policy. Canada Revenue Agency (CRA) - Gifts, awards and social events.
4.
3.4
The University will not reimburse for gifts of alcohol.
3.5
The University does not donate to for-profit businesses.
3.6
University employees often personally contribute to gifts to honour fellow employees. This practice is encouraged.
3.7
Trivial gifts provided by researchers for individuals participating in research activities (such as trials or surveys) are allowed and are non-taxable, provided they are tracked by the researcher and values do not exceed $50 per individual per instance.
GIFTS 4.1
Non-taxable Gifts include: •
•
Appreciation / recognition gifts Any number of non-cash gifts given in a calendar year (January to December). The total must not exceed $500 per individual per year. o
By University policy, sympathy gifts (e.g. flowers, fruit baskets) may not exceed $100 per individual.
o
By University policy, Christmas gifts (excludes taxable gifts – see section 4.2) may not exceed $100 per individual.
o
A non-cash appreciation gift to a non-employee is not taxable, but by University policy is limited to the same $500 maximum per individual per year.
Long service / anniversary awards (employees only) - total value under $500, with any excess being taxable, provided it’s not for less than 5 years of service or not less than 5 years since the last long service award has been given to the employee. o
4.2
By University policy, long service awards are awarded by Human Resources.
•
Trivial Gifts
•
Donations are permitted to a not-for-profit organization on behalf of an individual in lieu of a sympathy gift. The donation from a faculty or department may not exceed $100 per individual. Donations must be in accordance with the University’s Hospitality Expense Policy.
•
Total Non-Taxable Gifts per Employee per year include: o Appreciation / recognition gift(s) unlimited # $500 or less per year o Long service / anniversary award $500 or less every 5 years o Trivial gifts all non-taxable
Taxable Gifts for employees include: • Cash/Cheques – any value, excluding trivial gift example. • Gift certificates – any value, excluding trivial gift example. • Gifts where the employee expects to receive a gift or negotiates the value. • Gifts to spouses, partners and/or family members. • Gifts which are a taxable benefit to the employee (e.g. bonuses).
Page 2/7
• • 4.3
The value of non-cash gifts (including non-taxable gifts) in excess of the $500 exemption (example: $600 in gifts = $100 taxable portion). Gifts that replace remuneration to an employee (e.g. honorarium based on an hourly wage).
If an individual is not currently an employee, an employee/employer relationship can still exist and the gift can be considered employment income. The determination as to whether an individual is an “employee” or “non-employee” is addressed in the Tax Guide for Paying Canadians. Employment income exists if the gift is: • • • •
For work performed or a specific work task. Associated with a job description or duties. Associated with specific performance or a specific service. Negotiated or expected by the individual.
Examples of performance or service resulting in employment income are visiting performers or visiting speakers with the expectation of compensation, or a specific value of honorarium.
5.
6.
7.
SOCIAL FUNCTIONS 5.1
For employees, generally, reasonable costs of social functions involving employees and/or their spouses, partners and other family members may be allowed by the University provided the expenditure has received the prior approval of the applicable supervising Senior Administrator, Dean or Executive Director, and is supported by original receipts, a written explanation of the purpose of the social function and a list of attendees. Consult both the Alcohol Policy and the Hospitality Expense Policy to ensure expenses are appropriate.
5.2
For non-employees, by University policy, reasonable costs are per the Hospitality Expense Policy.
EXCEPTIONS 6.1
The President and/or Vice-President (Finance and Administration) have the authority to approve exceptions to this policy.
6.2
Written exceptions requested and approved in advance, justifying the exception which would support the University’s mandate are required prior to submission of the expense.
6.3
The President's Award for Service Excellence is an exception to this policy.
PROCEDURES 7.1
Departments or Faculties: 7.1.1
Gift/Recognition Forms must be completed for all gifts that are taxable as per Section 4.2 and 4.3 for each individual receiving a gift.
Page 3/7
7.2
8.
9.
Personal reimbursements to a University employee for the purchase of a gift are to be submitted through the online expense claim system. Forward original receipts and completed Gift/Recognition Forms (not required for Trivial gifts) to Financial Services.
7.1.3
For gifts purchased through the accounts payable system by invoice or cheque requisition, original receipts and completed Gift/Recognition Forms (not required for Trivial gifts) must be sent to Financial Services, Accounts Payable.
Financial Services: 7.2.1
Review taxable status of gifts and process payments.
7.2.2
Collect Gift/Recognition Forms and forward taxable forms to Payroll for processing.
RESPONSIBILITIES 8.1
It is the responsibility of the department initiating the transaction to ensure the value of non-taxable gifts does not become taxable as per section 4.2 or 4.3, or the Gift/Recognition Form must be completed.
8.2
For taxable gifts given, it is the responsibility of the department initiating the transaction to ensure that all necessary fields are completed on the Gift/Recognition Form (Appendix A) to facilitate reimbursement, and for compliance with income tax regulations.
8.3
The Vice-President (Finance and Administration) shall have final authority on this policy subject to the disclaimer in Section 9 of this policy.
DISCLAIMER 9.1
10.
7.1.2
The taxable status of gifts is ultimately subject to acceptance by CRA.
RESOURCES 10.1
Appendix B Gift and Recognition – Frequently Asked Questions.
10.2
CRA - Gifts awards and social events.
10.3
Contact Financial Services at 403-329-2206.
Page 4/7
APPENDIX A TAXABLE GIFT/RECOGNITION FORM
Name of individual receiving Gift/Recognition: _________________________________ Description of Gift/Recognition___________ Value of Gift/Recognition_____________ Employee of the University:
U of L ID #:
Or Non-Employee of the University:
Social Insurance Number:
Mailing Address for Non-Employee: _____________________________________________________________________ _____________________________________________________________________ Explanation of the purpose of the Gift/Recognition:
____________________________________________________________________ ____________________________________________________________________ ____________________________________________________________________ ____________________________________________________________________ ____________________________________________________________________ ____________________________________________________________________ ____________________________________________________________________ ____________________________________________________________________
_______________________________ Signing Authority Signature
_______________________ Date
Please return completed form to Financial Services.
Page 5/7
APPENDIX B GIFT AND RECOGNITION – FREQUENTLY ASKED QUESTIONS 1.
What is the tax threshold if I wish to give a gift of recognition to a nonemployee, (guest speaker, distinguished guest, etc.)? Under Canada Revenue Agency (CRA) guidelines, gifts of cash or near cash (i.e. gift certificates, gift cards, etc.) if based on services rendered are considered honorariums and are taxable to the individual through payroll. Gifts of goods such as a print or mug are non-taxable but the University has imposed a maximum total dollar amount for the gift of $500 per individual per year. If there is any expectation or negotiation of the value with the individual, the value is employment income, not a gift.
2.
How many gifts can I give to an individual each year without the gifts being taxable? There is no limit to the number of gifts that can be given and remain non-taxable, as long as the total value of all gifts is under $500 per year. Any amounts above the $500 exemption are taxable and reported as income for the individual.
3.
Which gifts are taxable benefits to the employee when paid by the employer? Examples include parking, reimbursements for a gift or an award that the employee selected (with the exception of the University’s long-service awards), memberships at a recreational facility, club dues or public transit passes.
4.
A non-employee’s relative has passed away. Can we send a fruit basket and flowers without it being taxable to the non-employee? Yes. University policy is that sympathy gifts may not exceed $100.
5.
If the employee received $300 in appreciation gifts, can the $200 remaining for the year be used for their long service award? No, unused amounts in one category (e.g. gifts and awards) cannot be transferred to another category (e.g. long service award), as CRA has set limits for each and the University reserves the right to pay less than the CRA limits.
6.
What types of things are considered not allowable as gifts? The University will not reimburse for gifts of alcohol.
Page 6/7
7.
What types of things are considered allowable as gifts? Examples of gifts include such items as mementos, U of L logo items, flowers, merchandise, event tickets, jewelry or artwork. If you are unsure of the appropriateness of other gifts not listed, contact Financial Services at 403-329-2206.
8.
I have purchased gifts which I intend to hand out. How can I be reimbursed for this purchase? You can prepare an online expense claim and forward the original receipts to Financial Services for reimbursement. If the gifts are taxable, as outlined in Section 4.2, complete a Gift/Recognition Form and forward to Financial Services.
9.
I wish to give a bottle of wine as a Christmas gift. Is this acceptable? No, the University will not reimburse for gifts of alcohol.
10.
Who is responsible for the collection of information, (social insurance number, address, etc.), for individuals who will be receiving a taxable gift? It is the responsibility of the department initiating the transaction to ensure that all the proper information on the Gift/Recognition Form, including the social insurance number and address, has been collected for compliance with income tax regulations.
11.
Can I give someone a gift certificate or cash? Yes, however all cash or near cash gifts are taxable gifts regardless of the amount, excluding trivial gift example; A Gift/Recognition Form must be completed and forwarded to Financial Services for each taxable gift.
12.
I have a unique question in regards to gifts. Where can I get more information? Additional information can be obtained by contacting Financial Services at 403-3292206 or by visiting CRA - Gifts, awards, and social events, or Income Tax
Technical News No. 40at http://www.cra‐arc.gc.ca/E/pub/tp/itnews‐ 40/itnews40‐e.pdf.
Page 7/7
