Tax Court of Canada

Social Welfare

It was employees who primarily benefited from distribution of beer tickets

Appeal by employer from reassessment by Minister regarding Canada Pension Plan remittances. Employer was beer manufacturer who regularly provided employees with tickets entitling them to free cases of beer from manufacturing premises. Minister reassessed employer on basis that free beer was taxable benefit to employees such that its retail value had to be included for purposes of employer’s Canada Pension Plan remittances. Appeal dismissed. Value of beer would be subject to employee contribution and employer remittance if it was taxable benefit under s. 6(1)(a) of Income Tax Act (Can.). To fall into common law exception, free beer must have been provided primarily for benefit of employer and any personal enjoyment by employee must have been merely incidental to employer’s business purposes. Employer undoubtedly derived some benefit from both quality control and marketing perspective from its staff beer policy encouraging employees to report any problems with quality and to share free beer with non-employees. Employees had no legal obligation to cash in ticket, sample product, share it with others or report any quality control problems, and employer received few quality reports and did not even monitor employees’ use of tickets. Employer did not rebut Minister’s assumption that it was employees who primarily benefited from distribution of beer tickets, and employer who received incidental benefit. It was established law that employee benefits should be valued at fair market value, which in this case was retail value of beer rather than cost to employer of manufacturing it.

Steam Whistle Brewing Inc. v. M.N.R.

(June 26, 2012, T.C.C., Pizzitelli J., File No. 2011-4037(CPP); 2011-4039(EI)) 218 A.C.W.S. (3d) 216 (15 pp.).

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