2 November 2007 External T.I. 2007-0229201E5 - Information Returns under Regulation 237

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.

Principal Issues: Whether an information return pursuant to section 237 of the Income Tax Regulations is required for a reimbursement?

Position: Question of fact, but likely not in this case.

Reasons: The individual is a volunteer and is not remunerated for any services but is reimbursed for the cost of an internet connection. As such, the individual does not appear to be subject to paragraph 153(1)(g) in respect of the reimbursement such that the individual would not appear to be subject to Regulation 200 nor would such individual be a "payee" within the meaning of Regulation 237(1).

XXXXXXXXXX 								2007-022920
									Michael Cooke
November 2, 2007

Dear XXXXXXXXXX:

Re: Form T1204 Reporting

We are writing in reply to your correspondence of March 29, 2007, wherein you asked whether the issuance of Form T1204 was required in a particular situation.

Briefly, we understand that an individual was a member of a volunteer committee at the XXXXXXXXXX (the "Institution"). The particular individual was reimbursed for the cost of an Internet service connection that was used by him in connection with the volunteer services that he provided to the Institution. It is also our understanding that the particular individual did not receive any compensation in respect of these volunteer services.

You have asked whether the reimbursement for the cost of the Internet service connection was required to be reported on Form T1204 by the payer.

The particular fact situation outlined in your correspondence appears to involve completed transactions between the company and specific taxpayers who have not otherwise been identified. This Directorate does not provide written interpretations involving completed transactions since, as mentioned in paragraph 22 of Information Circular IC 70-6R5, "Advance Income Tax Rulings", dated May 17, 2002, such requests should be made in writing to the appropriate Canada Revenue Agency ("CRA") tax services office ("TSO"). Notwithstanding the foregoing, we are prepared to provide the following comments.

Paragraph 153(1)(g) of the Income Tax Act (the "Act") imposes a withholding and reporting requirement on every person paying at any time in a taxation year fees, commissions or other amounts for services. Where paragraph 153(1)(g) applies, subsection 200(1) of the Income Tax Regulations (the "Regulations") requires the person making such a payment to issue an information return in prescribed form (i.e. Form T4A) in respect of the payment unless an information return in respect of the payment has been made under sections 202, 214, 237 or 238.

Subsection 237(2) of the Regulations requires a "federal body" that pays or credits an amount (that would have generally been subject to reporting under the above-noted subsection 200(1) of the Regulations) to a "payee" to report the amount on Form T1204 instead of Form T4A. For purposes of subsection 237(2) of the Regulations, a "payee" means a person or partnership to whom an amount is paid or credited in respect of services rendered, by or on behalf of the person or the partnership.

Whether an amount paid is in respect of a contract for services is a question of fact that can only be determined by reviewing the facts in the particular circumstances. However, where an individual receives no remuneration for services provided and is simply being reimbursed or paid an allowance for actual and reasonable out of pocket expenses, it is our view that a federal body making such a payment would not be required to file an information return in respect of such a payment.

Accordingly, it would appear that Form T1204 would not be necessary with respect to the reimbursement to the particular individual described above.

We trust that our comments will be of assistance.

Yours truly,

Renée Shields
for Director
Business and Partnerships Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch