Employee discount tax under review, business community reacts

Employee discount tax under review, business community reacts”

For example: if an employee receives a 60 per cent discount on product at the store they work at, and that discount is not available to the public, the CRA now considers the difference between what a customer would pay for that product and the lessened price that the employee pays (the value of the discount), a benefit they can tax. According to National Revenue Minister Diane Lebouthillier, there have been no official changes to the law. She said the CRA made the original decision to change the wording not her.

Late Wednesday, Prime Minister Justin Trudeau weighed in on the issue. The source also said that the minister is disappointed that the CRA's updated guidance, meant to clarify employer calculations on what is taxable, has been "misinterpreted".

A spokesman for Lebouthillier said earlier Wednesday that the CRA will hold an internal review on the wording change, which will be followed by a consultation on the issue with industry groups.

He chalked the confusion and pulling of the document to a case of "mixed up communications that does not reflect at all the intention of our government", and avoided pointing fingers at the bureaucracy.

The agency's concern is really about individuals who receive larger, non-monetary benefits that go unreported as income, said the source, who was not authorized to discuss the matter publicly.

Shortly after the statement was sent out, the folio was pulled from the CRA's website.

It has been a confusing week for employers following tax guidance from the Canada Revenue Agency aimed at helping them interpret their tax obligations around employee discounts.

As the minister responsible for the CRA, Lebouthillier is taking into consideration the concerns of stakeholders who are anxious, employers will cut employee discounts for the sake of simplicity, or come tax time it would overly burden their filing requirements.

The previous guidance language on the subject, he says, denoted that employee discounts were normally not taxable save for a few exceptional circumstances, such as employers selling employees items below cost. The value of the benefit is equal to the fair market value of the merchandise purchased, less the amount paid by the employee.

The government's backtrack comes amid a stunning backlash to the change from the Retail Council of Canada and thousands of the country's two million retail workers. "It does seem to us that there's some kind of assertion of political oversight over the file at this point at the ministerial level".

"The Liberals still haven't taken this bad idea off the table, but maybe they're starting to realize that going after low-income earners while ignoring the corporate elite, is a non-starter for Canadians", New Democrat MP Pierre-Luc Dusseault said in a statement Wednesday.

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