Gov't of Canada targeting retail workers with employee discount tax

Some Conservative MPs and business lobby groups are accusing the Liberal government of targeting low-wage earners with new rules around taxation of employee discounts.

The latest version of the 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.”

Conservative finance critic Pierre Poilievre issued a statement Monday saying the change means the government plans 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 Poilievre, but it means local business owners will have the headache of needing to “track all of these discounts.”

Conservative Senator Denise Batters posted on Facebook Monday that she sees the change as “yet another Trudeau government attack on the middle class ‘and those working hard to join it.’”

Conservative Deputy Leader Lisa Raitt, meanwhile, accused the Liberals of “picking the pocket of minimum wage earners.”

Karl Littler of the Retail Council of Canada called the move a “silly decision,” and said that he’s hopeful the government will “back off from this.”

“I don’t have a sense that the government is completely committed to this,” Littler added. “I have to think cooler heads will prevail.”

Aaron Wudrick of the Canadian Taxpayers Federation said that “on the surface, it looks like a triumph of bureaucratic pettiness over common sense.”

“These are very simple benefits for a lot of people of limited means,” Wudrick added.

Minister of National Revenue Diane Lebouthillier said in a written statement that the CRA’s goal is “to ensure that the agency does not impose additional administrative burdens on businesses.”

With a report from CTV’s Kevin Gallagher