According to National Revenue Minister Diane Lebouthillier, there have been no official changes to the law. The update 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 source also said that the minister is disappointed that the CRA's updated guidance, meant to clarify employer calculations on what is taxable, has been "misinterpreted".
The controversial update to the CRA documents first appeared in a tax folio and was later added to the agency's employer's guide.
However, there is an exception when the same discounts are offered to members of the public at some point during the year, for example: when vehicle companies offer "employee pricing" promotions.
Meanwhile, a government source has told the Canadian Press the CRA has no interest in pursuing smaller benefits obtained, for example, by retail employees who receive discounts on items like clothing because it's not cost effective for the agency.
On Tuesday, Lebouthillier insisted Ottawa was not targeting retail-sector workers.
Shortly after the statement was sent out, the folio was pulled from the CRA's website.
The Canada Revenue Agency has changed how it is interpreting existing tax law concerning taxable employee discounts.
A July 2016 update to a guidance document for employers about what employee merchandise benefits are considered taxable came to light earlier this week, prompting concern among mainly retail stakeholders that the CRA's updated interpretation of the law would result in major headaches for employers come tax time because they'd have to claim employee discounts on merchandise that weren't explicitly required to be claimed previously. The value of the benefit is equal to the fair market value of the merchandise purchased, less the amount paid by the employee.
If the confusion isn't cleared up, Retail Council of Canada vice president of public affairs Karl Littler cautions there is potential for this to become an "administrative nightmare" for employers come tax time.
Employee benefits have always been subject to tax, but the latest change to what the CRA considers taxable has some retail groups and the opposition Conservatives concerned about the impact on working class employers and their employees.
"Obviously, that's a pretty positive development from our perspective", Littler said in an interview.
"It doesn't end the issue, because we've got to have the consultation process, but it certainly changes things from where they were, which (was) extreme level of uncertainty".
"The Liberals still haven't taken this awful idea off the table, but maybe they're starting to realize that going after low-income earners while ignoring the corporate elite, is a non-starter for Canadians", New Democrat MP Pierre-Luc Dusseault said in a statement Wednesday.