Liberal Government Scraps Tax On Employee Discounts Amid Swift Backlash

Small business friendly customer service- young woman working behind the counter at a retail store smiling handing shopping bag to customer

After widespread confusion that resulted in the government pulling a Canada Revenue Agency edict to employers around taxable employee discounts, Treasury Board President Scott Brison is doubling down on the government's promise that it doesn't intend to pursue retail employers for taxable benefit claims.

As the minister responsible for the CRA, Lebouthillier is taking into consideration the concerns of stakeholders who are anxious, employers will cut employee discounts for the sake of simplicity, or come tax time it would overly burden their filing requirements. The Minister of National Revenue blamed bureaucrats at CRA for hatching a plan to tax employee discounts, a plan she says she never approved.

Retail Council of Canada vice-president Karl Littler recently told a parliamentary committee the change could create an "administrative nightmare" for employers who would normally offer retail staffers discounts on goods, or give hospitality workers a free meal.

The guidance provided the following example: Employees receive a large discount that's not available to the general public to buy software for personal use from their employer's supplier.

Pierre Poilievre, the Conservative finance critic, had called the CRA guidelines to tax employee discounts "insanity".

There has been some confusion around the CRA's update on employee discounts and if it is a new law for retail workers. The exception to this being: if the discount was available to members of the public at any point during the year, the discount doesn't have to be reported, as it's no longer considered a taxable benefit. The update was prompted by the tax court ruling in 2011 that the CRA's old guidance for employers was inaccurate and had to be updated.

The minister's office said the new way the CRA is instructing employers to calculate benefits could result in more benefits being declared than before, because the CRA's updated interpretation will put the rules on employers radars.

Shortly after the minister's statement was sent, the proposed guidelines were pulled from the CRA's website.

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