# Reporting cash-Back or even gift cards from credit card rewards as "Other Income"?



## timothius (Jun 7, 2010)

*Reporting cash-Back or even gift cards from credit card rewards as "Other Income"?*

Scenario: Using a personal credit card to fund business expenses (sole proprietor). Then using the points to do any of the following things: Statement Credit (cash-back), Gift Cards, Gift Certificates, Travel credit, etc.

One CRA senior rep I talked to, thought that fair market value should be assigned to ALL of the above and claimed as "Other Income". The CRA has a page on this very issue, but it isn't completely clear on some points. CRA Link on Loyalty Points & Other Programs

The page above links to a few examples and example #3 caught my eye since it *seems* closest to my situation. However, in that example the points are not claimed as income. I re-read the examples and am having a hard time differentiating between example #3 and example #2. Is the fact that the card used in example #3, does not provide a cashback option a significant factor? In my case there are no employees involved, but there really is no tangible difference between myself (owner) and employee or a business card or my personal credit card which is used for business. I'm quite unsure of what is the correct interpretation.

*Any help would be appreciated!*


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## Vancouver (Jan 12, 2013)

Some questions to help to put the amounts in perspective. How much is the value of your loyalty benefits? What is your tax bracket? If you added the cash equivalent of the loyalty points to your income, how much additional tax would you be paying? Is the amount worth worrying about if you just paid the tax on the extra "income" so as to have no issue with CRA? Let's say you earn $200 in cash back a year, are in the 20% tax bracket, then you'd claim the $200 as income and pay $40 tax on the loyalty points. You still get the benefit of the points or cash back plus no issues with CRA. In other words, is it worth it to you to pay $40 for peace of mind and be done with it?

Example #3 is tricky, it doesn't say if "Frank" is an employee using his personal card for work expenses for which he gets reimbursed. You are a sole proprietor, you and the business are one and the same. So #3 might not apply to you.


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