Historically, CRA has stated that an employee enjoying a discount on the purchase of merchandise from their employer is only taxable if a limited number of specified situations exist, such as where the employer makes a special arrangement with the employee or group of employees to buy the merchandise at a discount; the employee buys the merchandise for less than the employer’s cost; or the employer makes a reciprocal arrangement with another employer so that the employees of one employer can buy merchandise from the other at a discount.
While the above guidance is still published in certain CRA documents, CRA has recently released updated guidance which appears to limit this administrative position. In CRA Folio S2-F3-C2, CRA noted that where an employee receives a discount on merchandise because of their employment, the value of the discount is generally a taxable benefit. This would apply regardless of whether the discount was provided by the employer or a third-party.
This updated guidance appears to be consistent with a number of Court decisions.
Consider your business policy in respect of discounts on merchandise for employees in light of this updated administrative position.
The Canadian Retirement Income Calculator (https://www.canada.ca/en/services/benefits/publicpensions/cpp/retirement-income-calculator.html) provided by the Government of Canada estimates retirement income generated through a number of programs such as the Canada Pension Plan, Old Age Security pension, an individual’s employer’s pension plan, RRSPs, and other sources based on past and intended contributions.
When using this tool, individuals should have their CPP Statement of Contributions, financial information about their employer’s pension, most recent RRSP statement, and any other information related to savings that will provide for ongoing monthly retirement income.
Use this tool to help assess your financial readiness for retirement.
We frequently get questions regarding acceptable formats for retaining documents and records that may later be requested by Canada Revenue Agency.
Paper formats are always acceptable, and electronic or imaged versions are acceptable under certain conditions.
For more information, including:
- What is an acceptable format?
- What is imaging?
- Destroying imaged paper documents
- Backing up electronic files
A death benefit is a payment received subsequent to the death of an employee, in recognition of the deceased employee’s services. Up to $10,000 can be received by the Estate or beneficiaries of the deceased as a death benefit on a tax-free basis. As an employment-related cost, this would generally be deductible to the payer.
A March 14, 2017 Technical Interpretation, addressed several questions related to these payments following the death of an owner-manager.
CRA noted that the determination of whether an individual is an employee is a question of fact. The fact that an owner-manager received salaries for several years but was only paid dividends in the two years prior to death would not automatically mean that no death benefit could be received. It would be more difficult to support an employment relationship where the individual never received employment income from the corporation.
The existence of a formal commitment, such as a contract or a Directors’ Resolution, prior to the date of death is not a requirement for an amount to be a death benefit. Finally, a death benefit could be paid out over time, but the $10,000 exclusion applies only once, not once for each year.
Consider this tax-free employment benefit.