Taxing Employee Discounts

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CROCKD
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Taxing Employee Discounts

Post by CROCKD » 12 Oct 2017 13:09

Some genius bureaucrat at CRA decided it would be a good idea to tax employee discounts e.g. that free hamburger to a minimum wage worker or discounts on clothing for retail workers - already one of the lowest paid job categories. And don't forget the nightmare of policing and tracking stuff like this, imposed mostly on small business.
At least the minister had the good sense to rein in this nonsense.
As this article states it is all a matter of degree.
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Koogie
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Re: Taxing Employee Discounts

Post by Koogie » 12 Oct 2017 13:29

Pfff.. cue the "you are lucky to pay taxes" crowd.
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Re: Taxing Employee Discounts

Post by kombat » 12 Oct 2017 14:44

Two thoughts:

1. Wouldn't a part-time, minimum wage worker (I.e., a student, a part-time stay-at-home parent looking for a little play money) already fall well below the Basic Personal Amount exemption, and not pay any income tax at all anyway?

2. Couldn't an argument be made for excluding employer-granted stock options from taxation? I always had to pay tax on the difference between the "fair market value" of the shares I bought, and the discounted rate I paid for them, as the employer was picking up the difference, and that was considered a taxable benefit. I know we're talking orders of magnitude of difference between a half-price cheeseburger, and steeply-discounted Bombardier shares in an Employee Stock Purchase plan, but aren't they conceptually similar enough to receive similar treatment by the tax man?

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adrian2
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Re: Taxing Employee Discounts

Post by adrian2 » 12 Oct 2017 15:30

kombat wrote:
12 Oct 2017 14:44
I know we're talking orders of magnitude of difference between a half-price cheeseburger, and steeply-discounted Bombardier shares in an Employee Stock Purchase plan, but aren't they conceptually similar enough to receive similar treatment by the tax man?
ISTM that a cheeseburger price is not materially different than a Bombardier share. :P
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AltaRed
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Re: Taxing Employee Discounts

Post by AltaRed » 12 Oct 2017 16:00

It is the materiality in aggregate that makes a difference. Where that fine line is, is a judgement call. Clearly CRA was planning on lowering the bar to an absurd level where administration would far outweigh any taxes generated.
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Re: Taxing Employee Discounts

Post by twa2w » 12 Oct 2017 16:05

I don't think this was a bureaucrat that made this decision. I think it came from the ministers office. Maybe if we get tough on perks like this, the members of the public who don't get benefits will support this and feel the government is cracking down and leveling the field.
This is what a friend at CRA hinted at.. Note that there were several mixed messages from the ministers office before it was kiboshed.
Of course it backfired and it was easy to blame CRA.

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Re: Taxing Employee Discounts

Post by SQRT » 13 Oct 2017 10:23

In theory employees should pay taxes on their discounts. As a bank employee I paid tax on my discounted mortgage and staff loans? Issue is materiality and costs to collect. Solution would be some kind of cut off so small amounts could be ignored. I know people who work in high end retail businesses (Holt Renfrew?) who get thousands of dollars a year in discounts. In fact, that is one of the main reasons they work at these places.

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