In philosophical terms, the following argument would be described as “reductio ad absurdum,” or “reduction to absurdity.” You take an argument, and reduce it to the point of the ridiculous.
It only seems fair, because in the tax system, there’s plenty of reductio, and a fine dose of absurdum as well.
This past week, the federal government got itself into a pile of trouble when the Canadian Revenue Agency suggested online that it would now expect employees of retail operations to be taxed for any employee discounts they receive.
The government did the fastest backtracking effort ever, saying the plan was put online by tax officials without ministerial approval. Even the prime minister weighed in on Twitter, saying “We are not going to tax anyone’s employee discounts.”
They can, however.
Under the Income Tax Act, subsection 6 (1), “income” includes the value of “benefits of any kind whatever received or enjoyed by the taxpayer ... by virtue of the taxpayer’s office or employment,” with some exceptions.
This past week, the federal government got itself into a pile of trouble when the Canadian Revenue Agency suggested online that it would now expect employees of retail operations to be taxed for any employee discounts they receive.
But if, as the taxman, you’re going to take that to heart, how would you address the following tax problems?
• Your employer supplies drinking water in large jugs at water coolers, and absorbs the expense. Should you claim your share of that benefit on your income tax? If you drink tap water instead, do your fellow employees have to absorb your share into their taxable income?
• The kitchenette in your office has a machine that sells coffee for 25 cents — do you claim the difference between that price and the price of a double-double at Tim Hortons as income?
• You are a member of Parliament. You go to a taxpayer-funded cafeteria and buy a sandwich. The sandwich, a turkey bacon club, costs $1.30 plus HST. A comparable sandwich on the open market costs an average of $4.25 plus HST. Do you add a taxable benefit of $2.95 to your taxable income for every day you enjoy a tasty cut-rate sandwich?
• Your company has an annual children’s Christmas party — you have two children between the ages of three and five. The three-year-old receives a toy worth approximately $10.50. The five-year-old? A present valued at $11. If you were not employed with the company, neither child would have received a present. Does the resulting $21.50 appear in your taxable income, or should you file separate tax forms for your two under-aged children and take advantage of their minimum personal deductions?
• It’s cold. You wear a hat when you walk to work. Your employer gave you the hat, with company logo on the front, for free. Do you claim the entire value of the hat as a taxable benefit, or are you allowed to reduce that amount by the nominal advertising value of your forehead?
Nothing is certain but death and taxes, Benjamin Franklin wrote.
And in the world of taxes, common sense is most uncommon.
