Are Credit Card Cash Back Rewards Taxable?

In Canada, cash back rewards on personal spending are usually not taxable.

They’re generally treated as a rebate or discount on what you bought, not as income—similar to getting a coupon or sale price.

However, there are some edge cases (like business spending or certain promo bonuses) where tax rules can get more complicated.

Cash Back With KOHO Everything

If you like earning rewards but don’t want to overthink tax treatment or juggle debt, KOHO Everything lets you earn cash back:

• Grow your savings with 3.5% interest, one of the highest rates in Canada

• Earn a 2% cash back rate on groceries, eating, drinking, and transportation and 0.5% cash back on everything else

• There are no foreign exchange fees, so you save on international purchases and travel

• Unlimited transactions and free e-transfers

• No minimum balance required, ever.

When Cash Back is Usually Not Taxable

For most people using a card for personal expenses:

• Cash back on groceries, gas, dining, bills, etc.

• Points or rewards earned because you spent money

• Boosted earn rates in certain categories

…are typically treated as price reductions, not income.

You already paid with after-tax dollars, and the cash back is basically part of the transaction, not a separate paycheck.

When Cash Back Might Have Tax Implications

There are a few situations where you may need to pay closer attention:

1. Business Spending

   • If you run a business and use a card for business expenses, the reward may effectively reduce your deductible expense.

   • In practice, your accountant may treat this as lowering the cost of the items you expensed.

2. Bonuses Not Tied to Actual Spending

   • If you get a cash bonus just for opening an account or meeting conditions that aren’t really “spend $X, get $Y back,” it could be treated differently from a standard rebate.

   • Sometimes those promos can be treated more like interest or incentives, depending on how they’re structured.

3. Cash Back on Business Cards Used Personally (or vice versa)

   • Mixing business and personal can make the tax treatment fuzzy, especially if you’re claiming deductions.

Because of these edge cases, if you’re self-employed, running a business, or getting larger bonuses, it’s smart to check with a tax professional or refer directly to CRA guidance.

How to Think About it at Tax Time

A simple rule of thumb (not personal tax advice):

• Personal spending rewards?
  → Usually treated like rebates, not taxable income.

• Business-related rewards or large promo bonuses?
  → May need a closer look with an accountant or tax pro.