Merchandise discounts on sales to employees
We wish to remind you that if you sell merchandise to an employee at a reduced price, we do not, as a rule, consider this a taxable benefit, as long as the discount is reasonable under the circumstances.
However, the employee receives a taxable benefit in the following situations:
- If merchandise that is neither outdated nor unfit for sale is purchased from you by the employee at below-cost prices.
- If you have made a special agreement with the employee or a selected group of employees, allowing for the purchase of merchandise at a discount.
Where the benefit is taxable, its value is equal to the difference between the FMV of the merchandise (including GST and QST) and the price paid by the employee.