Brash tax

The Telegram (St. John’s) - - EDITORIAL -

In philo­soph­i­cal terms, the fol­low­ing ar­gu­ment would be de­scribed as “re­duc­tio ad ab­sur­dum,” or “re­duc­tion to ab­sur­dity.” You take an ar­gu­ment, and re­duce it to the point of the ridicu­lous.

It only seems fair, be­cause in the tax sys­tem, there’s plenty of re­duc­tio, and a fine dose of ab­sur­dum as well.

This past week, the fed­eral govern­ment got it­self into a pile of trouble when the Cana­dian Rev­enue Agency sug­gested on­line that it would now ex­pect em­ploy­ees of re­tail op­er­a­tions to be taxed for any em­ployee dis­counts they re­ceive.

The govern­ment did the fastest back­track­ing ef­fort ever, say­ing the plan was put on­line by tax of­fi­cials with­out min­is­te­rial ap­proval. Even the prime min­is­ter weighed in on Twit­ter, say­ing “We are not go­ing to tax any­one’s em­ployee dis­counts.”

They can, how­ever.

Un­der the In­come Tax Act, sub­sec­tion 6 (1), “in­come” in­cludes the value of “ben­e­fits of any kind what­ever re­ceived or en­joyed by the tax­payer ... by virtue of the tax­payer’s of­fice or em­ploy­ment,” with some ex­cep­tions.

But if, as the tax­man, you’re go­ing to take that to heart, how would you ad­dress the fol­low­ing tax prob­lems?

• Your em­ployer sup­plies drink­ing water in

large jugs at water cool­ers, and ab­sorbs the ex­pense. Should you claim your share of that ben­e­fit on your in­come tax? If you drink tap water in­stead, do your fel­low em­ploy­ees have to ab­sorb your share into their tax­able in­come?

• The kitch­enette in your of­fice has a ma­chine

that sells cof­fee for 25 cents — do you claim the dif­fer­ence be­tween that price and the price of a dou­ble-dou­ble at Tim Hor­tons as in­come?

• You are a mem­ber of Par­lia­ment. You go to a

tax­payer-funded cafe­te­ria and buy a sand­wich. The sand­wich, a turkey ba­con club, costs $1.30 plus HST. A com­pa­ra­ble sand­wich on the open mar­ket costs an av­er­age of $4.25 plus HST. Do you add a tax­able ben­e­fit of $2.95 to your tax­able in­come for ev­ery day you en­joy a tasty cut-rate sand­wich?

• Your com­pany has an an­nual chil­dren’s

Christ­mas party — you have two chil­dren be­tween the ages of three and five. The three-yearold re­ceives a toy worth ap­prox­i­mately $10.50. The five-year-old? A present val­ued at $11. If you were not em­ployed with the com­pany, nei­ther child would have re­ceived a present. Does the re­sult­ing $21.50 ap­pear in your tax­able in­come, or should you file sep­a­rate tax forms for your two un­der-aged chil­dren and take ad­van­tage of their min­i­mum per­sonal de­duc­tions?

• It’s cold. You wear a hat when you walk

to work. Your em­ployer gave you the hat, with com­pany logo on the front, for free. Do you claim the en­tire value of the hat as a tax­able ben­e­fit, or are you al­lowed to re­duce that amount by the nom­i­nal ad­ver­tis­ing value of your fore­head?

Noth­ing is cer­tain but death and taxes, Ben­jamin Franklin wrote.

And in the world of taxes, com­mon sense is most un­com­mon.

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