Crackdown on staff discounts a nightmare for employers

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Crackdown on staff discounts a nightmare for employers

In the contentious document at the heart of this, the CRA advised employers that, in certain instances, employee discounts count as part of income and the Agency considers them fair game to tax.

But National Revenue Minister Diane Lebouthillier insists that Ottawa is not targeting retail-sector workers amid worries that changes in the latest version of a CRA document could force some individuals to pay tax on employee discounts.

The government's backtracking comes amid a swift backlash to the change from the Retail Council of Canada and thousands of the country's two million retail workers who would have been impacted by new taxes levied on the discounts they often receive on clothing, shoes and even meals that they receive from their employer. The Minister of National Revenue blamed bureaucrats at CRA for hatching a plan to tax employee discounts, a plan she says she never approved.

"The Agency issued a guidance document to mainly provide assistance for employers and is committed to further clarifying the wording of the guidance to reflect this".

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Shortly after the minister's statement was sent, the proposed guidelines were pulled from the CRA's website.

After widespread confusion that resulted in the government pulling a Canada Revenue Agency edict to employers around taxable employee discounts, Treasury Board President Scott Brison is doubling down on the government's promise that it doesn't intend to pursue retail employers for taxable benefit claims.

Lebouthillier's office says the updated CRA guidance document was only meant to help employers understand their tax-reporting requirements.

Brison said the document created an impression that was "not consistent" with the government's approach to the middle class. Indeed, subsection 6 (1) of the act states that income should include the value of "benefits of any kind whatever received or enjoyed by the virtue of the taxpayer's office or employment", with few exceptions. Previously, merchandise discounts were only considered taxable if the price paid by the employee was below the actual cost of the good to the employer.

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