Many credit cards offer loyalty programs to their cardholders.  Often it can be hard to collect a substantial number of points on personal purchases alone, but … if you were to pay business expenses on your credit card the points can add up much faster!  Makes sence, but you should know that you may have to pay tax on the value of those points.

It used to be that whoever controlled the card was responsible for determining the value of the “business points”.  That can be very difficult to determine for an employee using their personal credit card to pay a combination of personal and business expenses.   Quite frankly, I suspect that virtually nobody bothered.

Recognizing the burden (and undoubtably that it was a losing battle), effective 2009 the CRA will no longer require these benefits to be included in an employee’s income as long as:

1.   The points are not converted to cash

2.   The arrangement (of getting loyalty points from business purchases) is not meant as an alternate form of remuneration.

3.  The arrangement is not for tax avoindance purposes.

SO

If, on occasion, you use your personal credit card to make a business purchase because it is more convenient, any resulting points are yours – end of story.

BUT

If you make a habit of using you personal credit card as often as possible to pay for business expenses, a taxable benefit will still result.

AND

If you redeem points from your company credit card the fair market value of any rewards are still a taxable benefit to you.