Feds to re­move word­ing on dis­count tax, re­view lan­guage

The Standard (St. Catharines) - - NATIONAL - ANDY BLATCH­FORD

OTTAWA — The fed­eral gov­ern­ment ap­pears to be do­ing away with a con­tro­ver­sial tax pol­icy in­ter­pre­ta­tion that would have seen em­ploy­ees taxed for dis­counts they get at work.

Amid a grow­ing con­tro­versy, a spokesman for the National Rev­enue Min­is­ter Diane Le­bouthillier said Wednesday that the gov­ern­ment will pull the new word­ing at the heart of the de­bate from the Canada Rev­enue Agency web­site.

He said the CRA made the original de­ci­sion to change the word­ing, not Le­bouthillier.

“This doc­u­ment was not ap­proved by the min­is­ter and we are deeply dis­ap­pointed that the agency posted some­thing that has been mis­in­ter­preted like this,” John Power said in an e-mailed state­ment.

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 added.

The for­mer word­ing in the em­ployer’s guide on the is­sue of em­ployee ben­e­fits was to be re­in­stated as early as Wednesday af­ter­noon.

The de­ci­sion to re­store the old word­ing came after strong ob­jec­tions from busi­ness as­so­ci­a­tions that warned the change would lead to new taxes on re­tail work­ers, many of whom earn mod­est wages.

The in­dus­try groups said the new word­ing would have cre­ated sig­nif­i­cant ad­min­is­tra­tive bur­dens for em­ploy­ers, who would be re­quired to track em­ployee ben­e­fits.

Po­lit­i­cal op­po­nents also at­tacked the Trudeau gov­ern­ment over the is­sue.

The con­tro­ver­sial up­date to the CRA doc­u­ments first ap­peared in a tax fo­lio and was later added to the agency’s em­ployer’s guide.

The change stated that 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.”

It also said the value of the ben­e­fit is “equal to the fair-market value of the mer­chan­dise pur­chased, less the amount paid by the em­ployee.”

How­ever, the up­dated doc­u­ment noted that no amount will be in­cluded in the em­ployee’s in­come if the dis­count is also avail­able to the gen­eral pub­lic or to spe­cific pub­lic groups.

“The agency is­sued a guid­ance doc­u­ment that does not re­flect our gov­ern­ment’s in­ten­tions and the min­is­ter of national rev­enue has in­structed of­fi­cials to clar­ify the word­ing,” Power said.

Le­bouthillier in­sisted in a state­ment Tues­day that Ottawa was not tar­get­ing re­tail-sec­tor work­ers.

Karl Lit­tler, vice pres­i­dent of pub­lic af­fairs for the Re­tail Coun­cil of Canada, wel­comed the gov­ern­ment’s de­ci­sion to re­move the change.

“Ob­vi­ously, that’s a pretty pos­i­tive devel­op­ment from our per­spec­tive,” Lit­tler said in an in­ter­view. “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...

“It doesn’t end the is­sue be­cause we’ve got to have the con­sul­ta­tion process, but it cer­tainly changes things from where they were, which (was) ex­treme level of un­cer­tainty.”


National Rev­enue Min­is­ter Diane Le­bouthillier speaks dur­ing ques­tion pe­riod in the House of Com­mons on Par­lia­ment Hill in Ottawa in Septem­ber.

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