Is it taxable? Gifts, winnings, insurance payouts, strike pay and more

Income for tax purposes includes income from every source, inside or outside Canada. But some money that comes your way isn’t income at all, and the CRA lists amounts you don’t have to report. A useful question to ask: did the money come to you because of a job, a business or an investment?

Quick answers

Amount	Taxable?
Most gifts and inheritances	No
Lottery winnings	No, with some exceptions
Casual gambling winnings	Generally no
Gambling as a business	Yes
Most life insurance paid on a death	No
Most strike pay from your union	No
Gifts and awards from your employer	Generally yes
Interest or other income earned on any of the above	Yes

Gifts and inheritances

Most gifts and inheritances aren’t taxed, and you don’t report them. As the CRA explains it, a gift is a voluntary transfer where the giver gets nothing in return.

The exceptions are payments tied to your work:

• From your employer. Gifts and awards from an employer are generally taxable. Cash and near-cash gifts, such as gift cards that don’t meet the CRA’s conditions, are always taxable. Some non-cash gifts for special occasions, like a religious holiday, a birthday or a wedding, and some non-cash awards may not be taxable under the CRA’s policy.
• From your business or profession. Voluntary payments you receive because of your business or profession are taxable.

What you earn afterwards is taxable too. Interest on money you inherited, for example, goes on your return. If you’re dealing with someone’s estate, see wills, estates and the final return.

Lottery and gambling winnings

Lottery winnings of any amount aren’t taxed. The exception is a prize that is really income from a job, a business or property, or a prize for an achievement in your own field of work.

Gambling winnings generally aren’t taxed either, even if you gamble often and hope to win. The CRA treats gambling as a business only in exceptional cases, weighing:

• how organized the activity is
• whether you use special knowledge or inside information to reduce the element of chance
• whether you gamble for pleasure or as a way to earn a living
• how much and how often you bet

If you’re carrying on a gambling business, your winnings are business income, and the activity can also produce a business loss. Profits from bookmaking or running a gambling operation, legal or not, are business income.

Two related cases:

• Employer draws. If your employer hands out a bonus as prizes in a draw, the prize is employment income. An employer-promoted prize won by chance can count as a lottery win instead, but only if employees and their families are a small share of the participants, get no favoured position and contribute the same as everyone else.
• TV, radio and internet shows. A prize generally isn’t taxed if you won it in a draw, or if the prizes are all you got for taking part. It is taxed if you appeared under an employment or business contract, as a paid celebrity might.

Life insurance

Most amounts paid out of a life insurance policy after someone dies aren’t taxed. Interest you earn once you’ve invested the money is.

Strike pay

Most strike pay from your union isn’t taxable, even if picketing was a condition of membership. If you work for the union during the strike, as an employee, consultant or committee member, what it pays you for those services is taxable. Regular wages paid to union staff are taxable too.

Scholarships and bursaries

Scholarships and bursaries for elementary and secondary school aren’t taxable. Post-secondary scholarships, fellowships and bursaries aren’t taxable if you got them for a program in which you’re a full-time qualifying student, to the extent they’re meant to support that enrolment. If you’re a part-time qualifying student, the exemption is more limited and is based mainly on your tuition and program-related materials. You’ll get a T4A slip showing the full amount even when it’s exempt; it’s up to you to work out the exemption. Postdoctoral fellowships are taxable. See students and taxes.

Selling your own belongings

Things you own mainly for your family’s use or enjoyment, such as furniture, a car or a boat, are personal-use property. When you sell one:

• If it cost less than $1,000, the CRA treats the cost as $1,000.
• If you sell it for less than $1,000, the CRA treats the price as $1,000.
• If both are $1,000 or less, there’s no gain or loss and nothing to report.

If you still have a capital gain after applying these rules, you must report it. If you sell for less, which is common for things that wear out with use, you usually can’t deduct the loss: the CRA treats it as a personal expense. See capital losses.

Selling products is different. If you sell products, such as things you make, through sites like Etsy, eBay, Kijiji or Amazon, the CRA says to report that income as self-employment income. See side gigs and platform income.

Tips, gifts and donations from followers

If you’re an influencer or content creator, the CRA counts subscriptions, tips, gifts and donations from your followers as income, along with non-cash income such as trips from brands and sponsors. Report it as self-employment income.

Windfalls

An unexpected one-time windfall generally isn’t taxed. The CRA’s signs that money is a windfall include that you had no right to claim it, didn’t seek it or make an organized effort to get it, had no reason to expect it or to expect it again, and didn’t receive it in return for anything you did or provided.

Other amounts you don’t report

The CRA’s list also includes:

• the Canada child benefit and the Canada Groceries and Essentials Benefit, and related provincial and territorial credits and benefits
• compensation from a province or territory if you were the victim of a crime or a motor vehicle accident
• most amounts you take out of a tax-free savings account (TFSA)
• payments from Canada or an allied country for a veteran’s disability or death due to war service, if the amount isn’t taxable in that country
• income that’s exempt under section 87 of the Indian Act

What to do

• Generally, don’t report personal gifts, inheritances, lottery wins, life insurance death benefits or strike pay as income, unless one of the exceptions above applies.
• Do report the interest, dividends or other income they earn from then on.
• Keep a record of where large non-taxable amounts came from. Without one, you may not be able to prove they weren’t taxable; see keeping tax records.
• If money is tied to your job, business or online audience, treat it as income unless the CRA says otherwise.