Employee Travel a Taxable Benefit?

[Kasey]

The done deal.......... maybe???

 

http://www.cbc.ca/news/politics/liberal-government-cra-employee-discount-1.4349651

[Guest]

1 hour ago, Kasey said:

The done deal.......... maybe???

 

http://www.cbc.ca/news/politics/liberal-government-cra-employee-discount-1.4349651

No it is not. Just like a loaded gun, the ability to use will remain until the weapon is unloaded and the ammunition is discarded or in this case until the provision is removed by legislation.

[Fido]

The last time that this came up (too many years ago to remember when) CRA decided it was too cumbersome to bother collecting the tax.

[Kasey]

1 hour ago, Malcolm said:

No it is not. Just like a loaded gun, the ability to use will remain until the weapon is unloaded and the ammunition is discarded or in this case until the provision is removed by legislation.

I did say ........ maybe, ...........maybe not 

[boestar]

12 hours ago, UpperDeck said:

And.....what about free travel ( including airfare in the class to which they are entitled) not only for the member but also for a " designated person" ( not a spouse). Not for commuting, however.

There is no distinction between "Commuting" and "Free" Travel.  Same bucket.  Both would end up as a taxable benefit.  Not something we want for sure.

 

[boestar]

The question for the parking issue is, Who's benefiting? The Employee or the employer?  As an employee I derive no benefit from the free parking except a place to put my car.  My employer, however, benefits greatly (?) by my being able to be at work.  Who should pay the tax?

 

[Zan Vetter]

Whoever has less political clout? Whoever donated the least? That's who pays.

[Seeker]

On 2017-10-11 at 5:20 PM, thor said:

My take is that the Liberals asked CRA to try and float this taxable benefit increase and see what the response would be. Alas, it didn't go over well so the Liberals blame CRA for marking a stupid attempt at a tax increase.

This is exactly what happened and if anybody thinks it won't happen they are dreaming.

 

Here's how it will go:

Government wants the tax revenue.  Tells CRA to announce the tax and waits to see the public's reaction.

Strong negative reaction so government says it was an error.

CRA says, "whoops, should have held consultations and asked for public input first."

Public consultations held, of course everyone is against the tax.

CRA again announces the tax but this time it includes some token "free" allowance such as first $200/year no-tax and everything over that limit taxable.

Government brags about "responding to concerns of the tax-payers" and about how only the rich will be affected anyway.

[Seeker]

On 2017-10-11 at 9:06 PM, Fido said:

The last time that this came up (too many years ago to remember when) CRA decided it was too cumbersome to bother collecting the tax.

Yeah, but we have this new thing called a "computer" now.  The government and CRA will simply off-load the tracking and calculating to the employers.  In fact, I would expect some smaller companies will end their employee discounts because the calculations will be too onerous.

[thor]

If CRA/Liberal government want to collect more taxes then the first thing they should do is lower the tax base and then institute a compulsory receipt for every transaction. No numbered receipt? No payment required.. That way they would reduce under-the-table cash transactions and the tax would collectable on income earnings and GST, HST and PST as required. Just my opinion. 

[Guest]

The say "Trust Us" we will not tax you.  BS along the lines of "the cheque is in the mail". 

Details missing from Liberal pledge not to tax employee discounts

 

 

Rachel Aiello, Ottawa News Bureau Online Producer

@rachaiello

Published Sunday, October 15, 2017 11:00AM EDT

OTTAWA – The government has yet to explain how it intends to fulfil Prime Minister Justin Trudeau’s pledge not to go after anyone’s employee discounts -- despite that promise contradicting how the Canada Revenue Agency enforces the law.

In an attempt to put the final nail in the coffin on concerns over a CRA edict that suggested the tax agency was changing its approach to taxable employee discounts, Prime Minister Justin Trudeau tweeted: “Let me be blunt: we are not going to tax anyone's employee discounts.”

Related Stories

• Fact check: Are employee discounts taxed, or not?

However, as it stands, despite the contentious document being pulled, the Income Tax Act remains unchanged, and within it there are longstanding rules that say employee benefits in some circumstances are taxable.

In an interview with Evan Solomon, host of CTV’s Question Period, Treasury Board President Scott Brison defended Trudeau’s tweet saying he intended to refer to the retail and hospitality sector, which was especially inflamed this week over the prospect of having to file things like employee discounts on T-shirts or hamburgers.

“In 140 character tweet it’s sometimes difficult to explain a 3,000-page Canadian tax code,” said Brison.

In a statement, a spokesperson for National Revenue Minister told CTV News the Canada Revenue Agency “must enforce” the provision of the act that says “all benefits and allowances received or enjoyed because of one’s employment are to be included in employment income,” including the value of discounts on merchandise.

When asked what threshold of employee benefits Canadians can expect to see taxed when the government comes out with its revised stance on this, Brison said that it wouldn’t make administrative sense to go after retail or hospitality claims “in an unreasonable way.”

The Agency, on the instruction of National Revenue Minister Diane Lebouthillier, pulled the edict by midweek, on the insistence that it was published without the minister’s approval and that the government has no intention of going after the retail sector.

‘So much doublespeak’

On CTV’s Question Period, Conservative deputy leader Lisa Raitt criticized the Liberals handling of the issue and said departmental officials dropped the ball on flagging this to the government before it blew up.

“This just shows you that this government doesn’t know how to govern, because you cannot have political interference with the Canada Revenue Agency and how they administer the law before them,” she said, adding that if they want to actually change whether or not employee discounts are taxed, it’ll require Finance Canada drafting amendments to change the law.

The revamped language around what employee discounts were considered taxable 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 document advised employers that the CRA would be interpreting the existing tax law differently and it would mean that, in certain instances, employee discounts count as part of income and the Agency considers them fair game to tax. 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.

“There’s so much doublespeak that’s happening that Canadians are confused about what’s happening with the Liberal taxation plan,” NDP MP Tracey Ramsey said on CTV’s Question Period, adding that the mixed messages over employee discounts is another example of this.

"They’re not revealing things that they should be, they’re targeting people that they shouldn’t be, they’re talking about creating a level playing field when they’re not,” she said.

CRA, Finance reviewing

Brison said the wording is now under review by both the CRA and Finance Canada. It’s yet to be seen if they will come back with a revised edict with different wording about the CRA’s expectations for what employers have to report, or with more concrete changes to the law around employee discounts.

“CRA and Finance will look at this… There has to be some common sense and reasonableness to this… But that’s the end point. We have to make sure that we get both the policy and the application of the policy right,” said Brison.

[st27]

When Evan Solomon tried to pin Brison down on what would be the threshold for employee discounts (ie a person who gets employee pricing on a car), Brison wouldn't bite, only to respond they wouldn't target retail and service workers.

 

[boestar]

The employee pricing on a ca would be exempt from the tax anyway since that discount is available to the general public.

[moeman]

All a company would need to do is hold an "employee pricing" event once a year to get out of it.

[boestar]

Yes and offer a coupon ( yes 1 coupon) for the same discount that any employee would get in a retail establishment.  as long as the coupon is available then the employee discount would not be taxable.

 

[DEFCON]

Why would the government 'allow' pass travel to be tax free year round when employee pricing would only be available to the public on a single day basis? 

.

[boestar]

I pay taxes on my pass travel already so point is kind of moot.

[UpperDeck]

6 (1) There shall be included in computing the income of a taxpayer for a taxation year as income from an office or employment such of the following amounts as are applicable

• Marginal note:Value of benefits

  (a) the value of board, lodging and other benefits of any kind whatever received or enjoyed by the taxpayer, or by a person who does not deal at arm’s length with the taxpayer, in the year in respect of, in the course of, or by virtue of the taxpayer’s office or employment, except any benefit.......

This is the wording of the statute...Income Tax Act....and it is the judicial interpretation of these words that govern. The CRA offers "guidance" via interpretation bulletins as to how it applies the statutory provisions based upon existing case law and its "expertise".

It is my understanding that it is the CRA that has indicated that a benefit available to the general public is not a a taxable benefit when enjoyed by an employee. The Act is very specific in addressing the issue of automobiles and the inclusion or exclusion of allowances from income.

Given that specificity and notwithstanding the words " other benefits of any kind whatever" above, it might be argued that sub-paragraph (a) above governs the interpretation of the section.....board, lodging and similar benefits within that class.

 

As an aside, within the subsection dealing with the taxation ( or exclusion) of automobile allowances etc. there is the following;

PARKING

(1.1) For the purposes of this section, an amount or a benefit in respect of the use of a motor vehicle by a taxpayer does not include any amount or benefit related to the parking of the vehicle.

[UpperDeck]

9 minutes ago, boestar said:

I pay taxes on my pass travel already so point is kind of moot.

Presuming you are not referring to HST or AIF, are you calculating the value of your travel and including that amount in the calculation of your total annual income?

I think the argument mentioned on the first page of this thread is compelling; the seat is not available to the employee unless empty once the flight is closed. It can't then be sold to the general public and has nil value. If it DOES  have a value then every empty seat is an income expense to the company and hence deductible.

[boestar]

I pay over $200 in taxes on a pass to fly to LHR.  I AM paying taxes on the "fare"

[Zan Vetter]

This thread is about income tax (and taxable benefits) not HST, AIF, and other fees on airline tickets.

I bet the Libs counter with some kind of nominal value argument because obviously the seat has value, that’s why we covet pass travel as a perq. The low income retail and service employees would probably be able to wriggle out of it, but airline people eh I’m not so confident. We always, always get screwed. 

This is really the flip side of all the so-called boutique credits the CPC was criticized for. Typical Liberals, inventing boutique taxes that raise little, cost a fortune to administer, expand the bureaucracy, piss everyone off, and ultimately bury us in our own dung so deeply that we can’t accomplish anything of value anymore. But hey, tax “the rich” if it’s makes you feel good.

Looking forward though to writing off all my unpaid deadheads as a what...capital loss? Negative income? I DH in J class. Think of the losses!