Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.
Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.
Principal Issues:
Whether taxpayer in specific fact situation qualifies for the subsection 81(3) exemption?
Position: No.
Reasons:
Taxpayer was appointed and not elected and the Regional Health Authority is not considered a "similar body" for purposes of subsection 81(3).
March 29, 2000
Ian Gray HEADQUARTERS
Director Wm. P. Guglich
Winnipeg Taxation Centre
Attention: Augusta Resende
2000-000179
XXXXXXXXXX (the "taxpayer")
Subsection 81(3) of the Act - Municipal Officers
This is in response to the taxpayers request dated November 24, 1999, for information regarding the application of subsection 81(3) of the Act, which you forwarded to us on January 13, 2000. You also forwarded to us a copy of a letter dated November 22, 1999, from the XXXXXXXXXX Regional Health Authority to the taxpayer. At issue are the taxation years 1994 to 1998.
The taxpayer indicates that he has been on the XXXXXXXXXX. In 1994, the Alberta Government disbanded the Northern Alberta Health Unit and established the XXXXXXXXXX Regional Health Authority (the Authority), pursuant to section 2 of the Regional Health Authorities Act (the "RHA Act"). Pursuant to section 4 of the RHA Act, the taxpayer was appointed a member of the Authority in 1994, and the two year term was extended in 1996 to 1998. In the November 22, 1999 letter, the Authority notified the taxpayer that the subsection 81(3) exemption was not available to the members of the Authority and that the amount of the taxpayer's stipend as a board member originally reported was incorrect.
In determining whether or not an allowance for expenses incident to the discharge of a person's duties is exempted under paragraph 81(3)(b) of the Act, one of the requirements is that the person must be "an officer of a municipal utilities board, commission or corporation or any other similar body, the incumbent of whose office as such an officer is elected by popular vote."
It is our view that the word "municipal" in paragraph 81(3)(b) of the Act limits the phrase "similar body," to one that is akin or equivalent to a body established at the municipal level of government. As the Regional Health Authorities established by the Province of Alberta are not equivalent or akin to a body established at the municipal level of government, it is our view that a Regional Health Authority cannot be regarded as being a "similar body" for the purposes of paragraph 81(3)(b) of the Act.
Furthermore, to qualify for the exemption under paragraph 81(3)(b) of the Act, the taxpayer must also be elected to the office by popular vote. Although the taxpayer in this case was elected to Town Council he was appointed and not elected as a member of the Regional Health Authority.
The taxpayer in this case would not qualify for the exemption under paragraph 81(3)(b) of the Act in respect of Regional Health Authority expenses as the "similar body" and the "elected" requirements in the law are not met.
For your information a copy of this memorandum will be severed using the Access to Information Act criteria and placed in the Legislation Access Database (LAD) on the Agency's mainframe computer. A severed copy will also be distributed to the commercial tax publishers for inclusion in their databases. The severing process will remove all material that is not subject to disclosure, including information that could disclose the identity of the taxpayer. Should your client request a copy of this memorandum, they can be provided with the LAD version, or they may request a copy severed using the Privacy Act criteria, which does not remove client identity. Requests for this latter version should be made by you to Jackie Page at 613 957-0682. A copy will be sent to you for delivery to the client.
We trust our comments will be of assistance.
John Oulton
Manager
Business, Property & Employment
Income Section III
Business and Publications Division
Income Tax Rulings Directorate
Policy and Legislation Branch
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