OTTAWA — The federal government appears to be doing away with a controversial tax policy interpretation that would have seen employees taxed for discounts they get at work.
Amid a growing controversy, a spokesman for the National Revenue Minister Diane Lebouthillier says the government will pull the new wording at the heart of the debate from the Canada Revenue Agency website.
John Power says the government is planning to hold an internal review on the wording change, which will be followed by a consultation on the issue with industry groups.
The decision to restore the old wording comes after strong objections from business associations that warned the change would lead to new taxes on retail workers, many of whom earn modest wages.
The industry groups also say the new wording would have created significant administrative burdens for employers, who would be required to track employee benefits.
Power says the original decision to change the wording in the document was made by the CRA without the minister's approval.
Lebouthillier insisted in a statement Tuesday that Ottawa was not targeting retail-sector workers.
Her office says it will ensure the former wording in the employer's guide on the issue of employee benefits is reinstated.
This document was not approved by the minister and we are deeply disappointed that the agency posted something that has been misinterpreted like this.
The update to the CRA documents first appeared in a tax folio and was later added to the agency's employer's guide.
The controversial change 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, it 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.
"This document was not approved by the minister and we are deeply disappointed that the agency posted something that has been misinterpreted like this," Power said Wednesday in an emailed statement.
"The agency issued a guidance document that does not reflect our government's intentions and the minister of national revenue has instructed officials to clarify the wording."
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