Canada Revenue Agency document suggests employee discounts will be taxed; feds say no they won’t

OTTAWA – The Trudeau government insists that employee discounts will not be taxed despite an updated Canada Revenue Agency document that suggested they will be.

Political rivals and business lobby groups, including the Retail Council of Canada, have voiced strong concerns that new wording in a government document could lead to higher taxes on retail workers, many of whom earn lower wages.

But National Revenue Minister Diane Lebouthillier insists that Ottawa is not targeting retail-sector workers amid worries that changes in the latest version of a CRA document could force some individuals to pay tax on employee discounts.

Lebouthillier's office says the updated CRA guidance document was only intended to help employers understand their tax-reporting requirements.

However, a source in her office says the decision to change the wording in the document was made by the CRA without the minister's approval.

The updated CRA guidance document for employers, known as a tax folio, states 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 says 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 folio notes 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.

"Our government recognizes the important role that the retail sector and those working in it play in our communities and in our economy," Lebouthillier said in a statement Tuesday.

"There have been no changes to the laws governing taxable benefits to retail employees. We are not targeting individuals working in retail.

"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."