Best Credit Cards for Travel Points 2024/2025: A Guide for Canadian Family Enterprises

Introduction: Unlocking the Power of Travel Rewards for Family Businesses

Who doesn’t love the idea of turning everyday spending into flights, hotel stays, or even a dream family vacation? Travel rewards credit cards make it possible, especially for family-owned businesses. Every time you pay for a business dinner, book a hotel, or even grab groceries, you could be racking up points that get you closer to your next adventure — all while keeping costs down.

But here’s the trick: not all travel credit cards are created equal. Some offer sky-high points for dining, others for travel, and some even wave goodbye to those pesky foreign transaction fees. So, choosing the right card (or cards!) can feel like finding the perfect travel buddy — one that works just as hard as you do.

In this blog, we’ll break down the best travel rewards cards for Canadian family-owned businesses. We’ll show you how to maximize your points, keep business and personal expenses organized, and make every dollar count. So, whether you’re a business owner looking to cut travel costs or just love the idea of treating the family to a weekend getaway, we’ve got you covered. Let’s dive into the world of travel rewards and see how far those points can take you!

 

Understanding Travel Rewards and Their Tax Implications

What are Travel Rewards?

Travel rewards are a valuable benefit offered by many credit cards, allowing cardholders to accumulate points or miles on purchases. These rewards can then be redeemed for travel-related expenses, such as flights, hotels, and car rentals. For family-owned business owners, these points offer the flexibility to cover travel costs related to both personal and business trips. Rewards points typically accrue on a points-per-dollar basis, with some cards offering higher earn rates for specific spending categories, such as travel, dining, or gas. In addition, some cards provide generous welcome bonuses for meeting minimum spending requirements, making them attractive for business owners with substantial business-related expenses.

Tax Treatment of Travel Rewards: Taxable or Non-Taxable?

The Canada Revenue Agency (CRA) has provided specific guidance on the tax treatment of loyalty points and travel rewards, highlighting when these rewards may or may not be considered a taxable benefit. Whether the travel rewards earned are taxable depends on several factors, including who controls the rewards points and whether they were obtained through a business-related expense. Let’s consider some examples provided by the CRA to understand these distinctions and identify how family business owners can maximize non-taxable travel rewards.

• Example 1: Employee Uses a Personal Credit Card for Business Expenses
  If an employee uses a personal credit card for business expenses and is reimbursed by the employer, any loyalty points earned are typically non-taxable. This is because the points are controlled by the employee, not the employer, and were earned through personal spending patterns. If the employee converts these points to cash, the amount may be reportable on their personal income tax return, but it does not create a taxable benefit as the employer does not control the points.

Maximizing Non-Taxable Benefits: For family business owners, using a personal credit card for reimbursable business expenses can help keep travel rewards non-taxable, as long as the rewards remain under personal control and are not converted to cash. This is a straightforward way to maximize the value of points for non-cash travel rewards.

• Example 2: Using Personal Credit Card for Business Travel with Predominantly Personal Points
  When an employee uses a personal credit card for business-related travel expenses and is reimbursed, loyalty points earned are generally non-taxable if the points are mainly collected through personal spending. For instance, if the employee redeems these points for personal travel, the CRA does not consider this a taxable benefit, as the points remain under the employee’s control and are primarily accrued through personal expenses.

Maximizing Non-Taxable Benefits: Family business owners who predominantly earn points through personal spending can use a personal card for occasional reimbursable business travel without triggering a taxable benefit. The points should be used for non-cash rewards like travel to ensure tax-free status.

• Example 3: Using a Company Credit Card with Personal Loyalty Program
  In cases where an employee uses a company credit card for business expenses but accumulates points through their own frequent flyer account, the CRA considers these points non-taxable if they are primarily earned through personal spending and remain under personal control. Even if the points are used to purchase goods or travel, they are generally not taxable as long as the employer does not control the points or have insight into their accumulation.

Maximizing Non-Taxable Benefits: Business owners can set up a separate frequent flyer or loyalty account for personal use, which allows them to keep these points separate from any company-owned rewards, keeping their value non-taxable.

• Example 4: Employer-Controlled Points on a Corporate Card
  If an employee uses a company credit card and the employer receives statements, pays for the card, and controls the loyalty points, any rewards redeemed by the employee are considered a taxable benefit. For example, if an employee redeems company-controlled points for a tablet with a fair market value (FMV) of $400, this amount must be reported as a taxable benefit, as the employee is receiving a benefit controlled by the employer.

Taxable Benefit Calculation: If the points are employer-controlled, any personal use of rewards is subject to tax based on the FMV of the items redeemed. The CRA requires this amount to be reported as a taxable benefit on the employee’s T4 slip.

Best Practices for Family-Owned Businesses

To maintain compliance and maximize the non-taxable benefits of travel rewards:

1. Use a Personal Credit Card for Reimbursable Business Expenses: By using a personal card and collecting points independently of the business, business owners can earn rewards on business expenses without creating a taxable benefit.
2. Avoid Converting Points to Cash: Cash conversions are more likely to trigger taxability, as they become more clearly defined as an income or alternative compensation.
3. Limit Business Expenses on Company Cards with Employer-Controlled Points: To avoid taxable benefits, business owners should reserve company cards for expenses that do not involve significant personal benefit from rewards. Alternatively, they can establish separate loyalty accounts under personal control to earn and redeem points freely without triggering tax implications.

By following these guidelines and leveraging the CRA’s examples, family-owned business owners can enjoy the benefits of travel rewards while staying within the framework of Canada’s tax regulations.

 

Financial Discipline – Separating Business and Personal Finances

Why Keep Business and Personal Finances Separate?

For family-owned businesses, keeping business and personal finances separate is fundamental to maintaining clear financial boundaries and ensuring compliance with tax and legal requirements. Using a dedicated business credit card and bank account helps avoid the potential risks and complications associated with mixing personal and business expenses. When business expenses are mixed with personal ones, it becomes more challenging to track deductible expenses accurately, which can lead to problems during tax filings or, worse, in case of an audit.

Having clear distinctions between personal and business transactions is also essential for liability protection. If personal and business finances are blended, it can blur the legal lines between the two, which might expose personal assets to business liabilities or vice versa. For family enterprises, where personal and business relationships are closely linked, these distinctions provide additional financial security and peace of mind.

Living Within Your Means and Family Budgeting Principles

Adhering to responsible budgeting principles is key to maintaining financial health in both personal and business spheres. Credit cards offer flexibility and convenience, but without disciplined usage, they can lead to overspending and debt accumulation. A strong family budget keeps spending aligned with income and helps avoid the pitfalls of over-leveraging through credit.

When using credit cards, business owners should exercise the same financial discipline they would apply to cash spending. For example, maintaining a budgeted limit for business and personal expenses ensures that only necessary purchases are made, keeping financial health and credit scores intact. This discipline is especially valuable for family business owners, as it not only supports personal financial stability but also ensures that the business operates within its means and reduces the likelihood of cash flow issues.

Best Practice Advice

For family business owners, following best practices for separating business and personal expenses simplifies both personal and corporate finances:

• Separate Business and Personal Credit Cards
  Designating one credit card for business expenses and another for personal use is essential to maintaining clear financial boundaries. This approach streamlines record-keeping, as all business-related purchases are easily identifiable, allowing for accurate tracking of deductible expenses and compliance with CRA requirements. For personal purchases, a separate credit card prevents unintentional mixing of expenses, which simplifies the bookkeeping and tax reporting process.
• Dedicated Bank Accounts for Business and Personal Finances
  Just as with credit cards, using separate bank accounts for business and personal finances makes it easier to manage cash flow, track expenses, and prepare accurate financial statements. A designated business bank account ensures that all revenue and expenses tied to the business are contained within a single account, which is beneficial for year-end accounting and tax purposes. Additionally, by isolating personal finances from business finances, owners are better protected against potential legal or financial liabilities tied to their business.
• Simplified Bookkeeping and Tax Compliance
  When business expenses are clearly documented, bookkeeping becomes significantly easier and more accurate. Separating accounts streamlines the process of filing tax returns, as deductible business expenses can be easily tracked and verified. This also reduces the likelihood of errors, helps prevent disputes over expense eligibility, and lowers the risk of audits.

In summary, separating business and personal finances is not just about financial organization; it’s about establishing a clear framework for financial discipline, legal compliance, and financial health in both personal and business realms. By adopting these best practices, family-owned businesses can enjoy a more efficient, secure, and straightforward approach to managing their finances, supporting their long-term growth and success.

 

Evaluating Travel Credit Cards – What Matters for Families and Business Owners

Factors to Consider When Choosing a Travel Credit Card

Selecting the right travel credit card involves weighing several key factors, particularly for family-owned business owners who frequently travel for both business and personal purposes. Here’s what to keep in mind:

• Annual Fees
  Many travel credit cards come with annual fees, which can range from modest to substantial. Before committing, it’s essential to consider whether the rewards, perks, and potential savings justify this cost. For instance, a high-fee card might offer substantial benefits like complimentary lounge access or travel insurance, which can offset the cost for frequent travelers. However, for those who travel less frequently, a no-fee or low-fee card may be a better fit.
• Earning Rate and Redemption Options
  The earning rate is a crucial factor for maximizing value, especially for families who incur travel expenses regularly. Look for cards that offer higher points on categories relevant to your spending, like travel, dining, or even business-related expenses like gas and office supplies. Additionally, redemption flexibility is key. Cards that allow you to redeem points for flights, hotel stays, and other travel expenses provide more options and let you maximize your travel points according to your specific needs.
• Welcome Bonuses
  Many travel cards offer substantial welcome bonuses if a spending threshold is met within the first few months. For family-owned businesses with high expenses, these bonuses can be an excellent way to accumulate points quickly, covering significant travel costs in a short period. Assess if the welcome bonus is worth the card’s annual fee, as this can provide a substantial boost to your travel rewards if used strategically.
• Insurance and Perks
  High-quality travel credit cards often come with various travel-related insurance benefits, including trip cancellation, medical insurance, and rental car coverage. These perks can be extremely valuable for frequent travelers, helping to cover unexpected costs and provide peace of mind. Rental car insurance, for example, can save costs for those who rent vehicles often, while trip cancellation insurance can protect non-refundable costs if travel plans change. Additionally, perks like lounge access or priority boarding are beneficial for frequent flyers and add value to the overall travel experience.

Tools and Metrics to Analyze Travel Credit Cards

To make an informed choice, it’s helpful to use tools and metrics that compare travel credit cards based on specific value propositions. Points analysis tools, available on sites like RateHub and Forbes, allow you to compare cards based on key metrics, helping you find the card that offers the best return for your specific spending patterns.

• Points per Dollar Spent for Travel
  A top factor is how many points you earn per dollar spent on travel-related purchases and other categories. Cards that offer higher points in specific spending categories, such as dining or travel, allow you to accumulate rewards faster. Business owners should select cards that match their typical spending patterns to maximize rewards.
• Flexibility in Point Redemption
  Redemption flexibility is essential for families and business owners who want versatile options. Some cards restrict points usage to specific airlines or hotels, while others allow points to be redeemed for cash back, gift cards, or various travel-related expenses. Cards that offer multiple redemption options allow you to tailor rewards to your specific travel needs.
• Transfer Partnerships with Airlines and Hotels
  Some travel credit cards have partnerships with airline and hotel loyalty programs, allowing you to transfer points to these programs for additional value. These transfer partnerships can provide access to exclusive offers, upgrades, and other perks, making them highly valuable for those who prioritize travel comfort and flexibility. Cards that allow transfers to multiple partners give the highest flexibility, as you can select the most advantageous partner based on your travel plans.

In summary, evaluating travel credit cards involves balancing several factors, from fees and earning rates to redemption options and perks. By using points analysis tools to calculate the best return on points value, family business owners can select a travel credit card that fits their spending habits and maximizes rewards for both personal and business travel. This approach ensures that every dollar spent contributes to building valuable travel points, allowing families and businesses to travel efficiently and cost-effectively.

 

Top Travel Credit Cards for Canadians – Ranked Analysis and Recommendations

For family-owned businesses looking to maximize travel rewards, these top-rated credit cards provide exceptional benefits. Each card is ranked based on earning rates, annual fees, redemption flexibility, and additional perks, with an emphasis on features that align with business and family needs.

1. American Express® Cobalt® Card

[https://www.americanexpress.com/ca/en/credit-cards/card/amex-cobalt/ ]

• Annual Fee: $12.99 monthly ($155.88 annually)
• Earning Rates: 5x points on dining and groceries, 2x points on travel and transit, 1x point on all other purchases
• Redemption Flexibility: Points can be redeemed for travel, gift cards, merchandise, statement credits, and dining experiences through the Amex Membership Rewards program.
  • Best Value for Points: Redeeming points for flights and hotel bookings through Amex’s Fixed Points Travel Program often yields around 1 cent per point or higher.
• Additional Perks: Comprehensive travel insurance, including emergency medical, trip interruption, and rental car insurance.
  Why It’s Ranked #1: The Cobalt Card leads with its high earn rates on essential spending categories for family-owned businesses, particularly dining and groceries. Its flexible redemption options across travel, merchandise, and statement credits allow cardholders to tailor rewards to their needs. With travel redemptions providing the best points value, it’s an outstanding choice for maximizing travel rewards. Family businesses in food, hospitality, or high dining expense categories will benefit most from its earning potential.

2. Scotiabank Gold American Express® Card

[https://www.scotiabank.com/ca/en/personal/credit-cards/gold-american-express-card.html ]

• Annual Fee: $120
• Earning Rates: 5x points on dining, groceries, and entertainment, 3x points on gas and public transit, 1x point on all other purchases
• Redemption Flexibility: Points can be redeemed for travel expenses, gift cards, and merchandise through Scotia Rewards.
  • Best Value for Points: Travel redemptions provide the highest value per point, often close to 1 cent per point when used for flights and hotels.
• Additional Perks: No foreign transaction fees and comprehensive travel insurance for emergency medical, trip cancellation, and rental car coverage.
  Why It’s Ranked #2: This card provides high earning rates across multiple categories frequently used by family-owned businesses and eliminates foreign transaction fees, ideal for international travelers. With travel redemptions yielding the best value, it’s a versatile choice for businesses looking to accumulate rewards quickly across various spending categories.

3. BMO World Elite™ Mastercard®

[https://www.bmo.com/main/personal/credit-cards/rewards/bmo-world-elite-mastercard/ ]

• Annual Fee: $150
• Earning Rates: 3x points on dining, entertainment, and travel, 1x point on all other purchases
• Redemption Flexibility: Points can be redeemed for travel expenses through BMO Rewards or used for gift cards and merchandise.
  • Best Value for Points: Travel redemptions generally provide the highest value, with point redemptions for flights often around 0.7 to 1 cent per point.
• Additional Perks: Includes comprehensive travel insurance and four complimentary passes to Mastercard Airport Experiences lounges.
  Why It’s Ranked #3: The BMO World Elite Mastercard provides high earning rates in key spending categories, particularly for travel and entertainment. Complimentary lounge passes and extensive insurance coverage make it a valuable option for frequent travelers, providing both comfort and security for business and leisure travel.

4. TD® Aeroplan® Visa Infinite Card

[https://www.td.com/ca/en/personal-banking/products/credit-cards/td-aeroplan-visa-infinite-card/ ]

• Annual Fee: $139
• Earning Rates: 1.5 Aeroplan points per dollar on Air Canada purchases, dining, and groceries, 1 point per dollar on all other purchases
• Redemption Flexibility: Points can be redeemed for flights and other rewards through the Aeroplan program.
  • Best Value for Points: Aeroplan redemptions for flights on Air Canada and Star Alliance partners typically yield the highest value, averaging around 1.5 cents per point, especially for business class flights.
• Additional Perks: Priority boarding, one free checked bag on Air Canada flights, and comprehensive travel insurance.
  Why It’s Ranked #4: Tailored for Air Canada loyalists, this card offers valuable perks like priority boarding and free checked baggage, making it ideal for frequent Air Canada travelers. Its niche benefits cater specifically to Aeroplan members, making it less versatile for those who seek more general travel rewards.

5. RBC Avion Visa Infinite

[https://www.rbcroyalbank.com/credit-cards/travel-rewards/avion/visa-infinite.html ]

• Annual Fee: $120
• Earning Rates: 1 point per dollar on all purchases
• Redemption Flexibility: Points can be redeemed through RBC Rewards for flights, hotel stays, or car rentals, and can also be transferred to other airline loyalty programs.
  • Best Value for Points: Flights tend to offer the highest value, especially when using the Avion transfer partners, which can yield a point value of around 1 cent or higher.
• Additional Perks: Comprehensive travel insurance covering trip cancellation, emergency medical, and rental car coverage.
  Why It’s Ranked #5: With a straightforward earn rate, the RBC Avion Visa Infinite is highly versatile. Its flexible redemption and the ability to transfer points to various airline loyalty programs add value for family businesses that prioritize flexibility in travel plans.

Conclusion: Each of these travel credit cards offers unique advantages for family-owned businesses and frequent travelers. With the American Express Cobalt Card leading the pack for its versatile redemption options, high points rates on common expenses, and superior travel value, this selection can help maximize rewards and support efficient, cost-effective travel solutions for both business and personal use.

 

Maximizing Points Value – Strategic Tips for Family-Owned Businesses

Maximizing the value of travel rewards points requires a strategic approach, especially for family-owned businesses juggling both personal and business expenses. Here are some targeted tips to help you get the most out of your points and optimize your travel rewards.

Tips to Maximize Travel Points Value

• Optimize Points Redemptions
  To get the most value from your travel rewards, focus on redeeming points for high-value rewards, such as flights and hotel stays, rather than goods or gift cards. Generally, travel redemptions provide the highest return on points, often close to or exceeding 1 cent per point, especially when booking flights or hotels through your credit card’s travel portal or partner programs. If possible, redeem points during peak travel times or when ticket prices are high, as this can further increase the value per point compared to paying cash.
• Pairing Cards for Maximum Benefit
  Using a combination of credit cards can be a smart way to maximize rewards across all spending categories. For instance, pairing a business credit card with a strong personal travel rewards card allows you to earn points on a broader range of expenses. This strategy works well for family-owned businesses, as business-related spending can go on one card while personal and family expenses are handled on another. Select cards that complement each other’s earn rates, such as a card with high points on dining and groceries alongside one that offers elevated points on travel. The combined points can often be pooled into a single travel account, further maximizing your earning potential.
• Annual Analysis of Credit Card Spending
  Regularly reviewing your spending habits and travel needs can help ensure your credit card portfolio aligns with your lifestyle and business requirements. Conduct an annual analysis to evaluate if your current card(s) are providing maximum value. Check if the categories you spend the most in match your card’s highest earn rates and if the card’s redemption options align with your travel goals. If your travel needs or spending patterns shift, consider switching to a card that offers better rewards in those areas, or add a new card that complements your existing one. Additionally, assess whether the value of the rewards and perks you’re earning outweighs the card’s annual fee.

These strategic tips can help family-owned businesses maximize the value of their travel points, enabling both cost-effective travel for business purposes and personal enjoyment. A focused approach to earning and redeeming points ensures that your travel rewards contribute to meaningful savings and memorable experiences for you and your family.

 

Conclusion: Travel Rewards as a Financial Tool for Family Enterprises

Travel rewards credit cards offer a valuable tool for family-owned enterprises, enabling them to leverage everyday expenses into significant savings on travel. By exercising financial discipline and strategically managing credit card rewards, family businesses can use travel points to offset travel costs, improve cash flow, and enhance both personal and business travel experiences.

Choosing a credit card that aligns with both personal and business needs is crucial. Maintaining separate cards for each ensures a clear division of expenses, making bookkeeping and tax compliance smoother and more efficient. The right card can provide meaningful rewards, allowing family enterprises to earn valuable travel points across all their spending categories.

For more tailored guidance, consider reaching out to us at Shajani CPA. We offer personalized advice on financial planning, credit card optimization, and tax compliance, helping family-owned businesses maximize their rewards while staying financially organized and compliant.

 

This information is for discussion purposes only and should not be considered professional advice. There is no guarantee or warrant of information on this site and it should be noted that rules and laws change regularly. You should consult a professional before considering implementing or taking any action based on information on this site. Call our team for a consultation before taking any action. ©2024 Shajani CPA.

Shajani CPA is a CPA Calgary, Edmonton and Red Deer firm and provides Accountant, Bookkeeping, Tax Advice and Tax Planning service.

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