Feds back off employee-discount tax, call for discussion

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 spokesperson 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.

John Power said the government intends to hold an internal review on the wording change, which will be followed by a consultation on the issue with industry groups.

The former wording in the employer’s guide on the issue of employee benefits will be reinstated as early as Wednesday afternoon, he said.

Power said the original decision to change the wording in the document was made by the CRA.

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

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 groups said the new wording would also have created administrative burdens for employers.

Political opponents also attacked the Trudeau government over the issue.

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.”

The updated document noted no amount will be included in the employee’s income if the discount is available to the public.