Lib­er­als back up from em­ployee dis­count tax

Gov­ern­ment prom­ises clar­ity on pro­posal

Metro Canada (Ottawa) - - Front Page - Ryan Tu­milty

The gov­ern­ment is dis­tanc­ing it­self from a pro­posal to start tax­ing em­ployee dis­counts, which ad­vo­cates ar­gue could cost re­tail em­ploy­ees those perks.

The Canada Rev­enue Agency iden­ti­fied the dis­counts as a taxable ben­e­fit in a fo­lio pub­lished on­line.

“When an em­ployee re­ceives a dis­count on mer­chan­dise be­cause of their em­ploy­ment, the value of the dis­count is gen­er­ally in­cluded in the em­ployee’s in­come,” reads the doc­u­ment.

That means a re­tail worker who saves $200 a year with their staff dis­count would have their in­come boosted by $200 and po­ten­tially have to pay taxes on that $200.

Karl Lit­tler, vice-pres­i­dent of Pub­lic Af­fairs with the Re­tail Coun­cil of Canada, said that’s con­trary to how the in­dus­try has been op­er­at­ing for years.

“It’s ei­ther go­ing to lead to more taxes for em­ploy­ees or less use of em­ployee dis­counts.”

Lit­tler said the ex­ist­ing guide for em­ploy­ers says dis­counts are only taxable if em­ploy­ees are get­ting mer­chan­dise be­low cost.

Diane Le­bouthillier, the min­is­ter of na­tional rev­enue, was not avail­able for an in­ter­view Monday, but her press sec­re­tary John Power sent a state­ment.

“Our gov­ern­ment rec­og­nizes the im­por­tant role that the re­tail sec­tor and those work­ing in it play in our com­mu­ni­ties and in our econ­omy. There have been no changes to the laws gov­ern­ing taxable ben­e­fits to re­tail em­ploy­ees. We are not tar­get­ing in­di­vid­u­als work­ing in re­tail.”

Power said the agency was work­ing on pro­vid­ing greater clar­ity but did not re­spond to a fol­low-up ques­tion on whether the new doc­u­ment was right.

“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.”

Lit­tler said the dis­counts are wide­spread in the large re­tail in­dus­try and tax­ing them would cre­ate is­sues for peo­ple.

“There are two mil­lion peo­ple who work in re­tail in the coun­try, and it wouldn’t sur­prise me if 1.8 mil­lion or more re­ceive some kind of dis­count.”

He said the pa­per­work to track some­thing like an em­ployee dis­count would be a ma­jor bur­den, re­quir­ing em­ploy­ers to fig­ure out how much of a dis­count it was com­pared to what the pub­lic could get and how to quan­tify it.

“You have to de­ter­mine what the fair mar­ket val­ues was, and that’s not an easy task,” he said.

Lit­tler said that for many em­ploy­ers the bur­den wouldn’t be worth the cost and some would get rid of the dis­counts.

“I think it would de­pend on the em­ployer, but cer­tainly some would,” he said.

Metro con­tacted so­cial-jus­tice and poverty groups about the pro­posed changes, but they de­clined to com­ment.

Metro | Ot­tawa

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