5 November 1998 External T.I. 9823295 - TAX TREAT. OF XXXXXXXXXX TRAINING ALLOWANCES.

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: The tax treatment of training allowance received by trainees of XXXXXXXXXX

Position: The training allowances would be taxable under section 5(1) or paragraph 6(1)(b).

Reasons: According to Revenue Collections, XXXXXXXXXX trainees would be considered employees of XXXXXXXXXX .

XXXXXXXXXX 		J. Gibbons
			5-982329
Attention:  XXXXXXXXXX 

November 5, 1998

Dear XXXXXXXXXX:

We are replying to your letter of September 3, 1998, in which you request our opinion on the income tax treatment of training allowances paid by XXXXXXXXXX to XXXXXXXXXX (the “trainees”). You also enquired whether these allowances are subject to Employment Insurance and Canada Pension Plan premiums. These latter questions have been referred to the Revenue Collections Directorate of the Assessment and Collections Branch, who, we understand, have replied to you under separate cover.

Written confirmation of the tax implications inherent in particular transactions are given by this Directorate only where the transactions are proposed and are the subject matter of an advance ruling request submitted in the manner set out in Information Circular 70-6R3. The following comments are, therefore, of a general nature only.

The question of whether the trainees and XXXXXXXXXX are in an employee/employer relationship govern the tax treatment of the allowances. In this regard, we understand that the Revenue Collections Directorate has opined that XXXXXXXXXX training program is considered pensionable and insurable employment. Accordingly, it is our view that training allowances received by XXXXXXXXXX trainees, including the portion of any such amounts received for meals and accommodation, would be taxed as employment income under subsection 5(1) or paragraph 6(1)(b) of the Act.

We trust that these comments will be of assistance.

Yours truly,

J.F. Oulton, CA
for Director
Business and Publications Division
Income Tax Rulings and
Interpretations Directorate