Employees of an insurance broker (“Employer”) who acquire insurance coverage for personal purposes (e.g., home or automobile insurance) through an employee incentive program are not required to pay a commission or any other amount to the Employer in respect of the placement of insurance. Is there a taxable benefit? CRA responded:
[Such employees are] able to acquire an insurance policy for a lower cost than that which is usually paid by the general public. That is, employees are not required to pay the commission … .
[Such] employees … receive a discount on services (i.e., the placement of insurance) by virtue of their employment. As the CRA’s administrative position concerning discounts on merchandise and commissions from personal purchases does not apply to discounts on services, such benefits are required to be included in employment income under paragraph 6(1)(a) … .
The value of the benefit ... would generally be the difference between the amount customarily charged by the Employer for the placement of insurance ... and the amount, if any, paid by the employee ... .