CRA allows employees to buy merchandise at cost

CRA previously stated that discounts on merchandise received by employees due to their employment are generally taxable as a benefit. The value of the benefit is equal to the fair market value of the merchandise purchased, less the amount paid by the employee, unless the discount is also available to the public or specific public groups.

However, a recent Ministerial letter confirms that the CRA's longstanding administrative policy is that employee merchandise discounts are generally not taxable benefits, unless the employer arranges for employees to buy merchandise for less than the employer's cost.

The same letter clarified that subsidized meals are not taxable benefits if the employee pays a reasonable charge covering the cost of the food, its preparation, and service.

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“Please note that the information provided in this article is of a general nature and may not be accurate for your specific situation. The information is current as of the date of posting and is not intended to provide legal advice. It's always recommended that you consult with a professional accountant and lawyer for personalized guidance and advice."