TAXING EMPLOYEE DISCOUNTS OCTOBER 10TH, 2017

Oct 10, 2017

By Michelle Saunders

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Canada Revenue Agency’s tax folio advises employers 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,” with the value of the discount assessed at “equal to the fair market value of the merchandise purchased, less the amount paid by the employee,” unless the discount is “available to the public or a segment of the public, at some point during the year.” This means the Liberals plan to tax things like a 10 per cent shoe discount offered to shoe salesmen, a meal discount offered to a waitress or a free gym membership given to a fitness trainer. Before the change, which some expect to come into effect Jan. 1, employers were advised to tax employee discounts only if the employee was purchasing the merchandise below the employer’s cost. Not only would the change “target those who can least afford to pay more,” according to Conservative finance critic Pierre Poilievre, but it means local business owners will have the headache of needing to “track all of these discounts.” Dan Kelly, the President of the Canadian Federation of Independent Business, weighs in.

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