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.
A-1807 R.A. Primeau (613) 993-7295
September 26, 1985
This is in reply to your letter of August 13, 1985.
You have indicated that you received a CHIP grant of $ XXXX in connection with your insulating your house in 1980 with urea formaldehyde foam insulation, and paid income tax on that grant. This insulation proved to be hazardous to health and had to be removed in 1984. Your total cost of removing the foam and restoring your house to the same saleable condition it had been in prior to the installation of the foam was $XXXX, $XXXX of which was paid by the government. In addition you received another CHIP grant for $XXXX
It is your position that you should not be taxed on this second CHIP grant of $XXXX because it in effect merely replaced the first (taxable) CHIP grant of $XXXX for the foam insulation.
We understand that the $XXXX payment was made under the Urea Formaldehyde Insulation Act, which specifically provides for the exemption of such payment from income tax under the Income Tax Act. However, the $XXXX CHIP grants was paid under the Canadian Home Insulation Program Act to assist you with respect to the cost of the new insulation, and there is no such exemption from income tax on this payment. We therefore regret to inform you that this $XXXX amount is taxable.
Any change from this position would require a change in law. Since amendments to the Income Tax Act are the responsibility of the Department of Finance, you may wish to contact them about this matter.
We trust that the above comments will be of assistance.
Yours truly,
ORIGINAL SIGNED BY Wm. R. McColm for Director Non-Corporate Rulings Division
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© Her Majesty the Queen in Right of Canada, 1985
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© Sa Majesté la Reine du Chef du Canada, 1985
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