Liberals back up from employee discount tax
Government promises clarity on proposal
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