This is in reply to your memorandum dated November 8, 1990 asking if a 50% discount on an automobile insurance premium granted to an employee of an automobile insurance company should be treated as a taxable benefit to the employee under paragraph 6(1)(a) of the Income Tax Act.
As indicated in paragraph 2 of Interpretation Bulletin IT-470R, taxpayers are generally taxable on the value of all benefits received by virtue of their employment. Exceptions to the general rule for traditional discounts on merchandise and commissions are discussed in paragraph 27 of this bulletin. In our opinion, a 50% discount on an employee's automobile insurance premium clearly falls outside the scope of the comments in this paragraph. Accordingly, it is our opinion that such a discount should be treated as a taxable benefit pursuant to paragraph 6(1)(a).
B.W. DathDirectorBusiness and General DivisionRulings DirectorateLegislative and Intergovernmental Affairs Branch