11 April 2000 Income Tax Severed Letter 2000-0009086 - SOCIAL ASSISTANCE

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: Is the reference to family allowances in ITA 81(1)(h)(i) still relevant considering that the CTB in ITA 122.6 replaced family allowances?

Position: Unsure.

Reasons: ITA 81(1)(h)(i) refers to family allowances under the Family Allowance Act, a federal statute now repealed, as well as to similar allowances paid under provincial legislation. The Provincial/Territorial authorities need to be consulted to obtain information about the existence of the mentioned similar allowances.

			April 11, 2000

	Business Returns and Payments 	HEADQUARTERS
	  Processing Directorate 	S. Parnanzone
	Business Returns Processing Division	(613) 957-9232

Attention: Joe Hartwick

			2000-000908

Social assistance payments and T5007 slips

This is in reply to your correspondence of February 18, 2000, asking whether the reference to family allowances in paragraph 81(1)(h) of the Income Tax Act is still relevant considering that family allowances were replaced by the Child Tax Benefit (CTB).

Your correspondence stated:

... this past Dec. I requested your opinion on whether T5007s should be prepared in the name of the caregiver or the child for payments made under BC's CIHR program. Your memo dated Dec.20 (your file # 993268 written by S. Parnanzone), stated that the T5007 amount should be included in the income of the recipient caregiver. The memo also commented that par. 81(1)(h) may apply to exempt certain payments from income inclusion. One of the conditions referred to is the receipt of family allowances. As you know, CTB replaced family allowances some time ago.

Our Comments

At the outset, we would like to emphasize that our December 20, 1999, memorandum neither stated nor suggested that "the T5007 amount should be included in the income of the recipient caregiver". In fact, the main points in our memorandum were:

1. Without making a definitive statement, based on the limited facts we concluded that payments under the Child in the Home of a Relative Program ("CIHR") qualified as social assistance payments described in paragraph 56(1)(u) of the Act.

2. The CIHR payments may qualify for exclusion from income by virtue of paragraph 81(1)(h) of the Act, if the conditions of the paragraph were met, one such condition being that the recipient of the payments did not also receive family allowances.

3. Section 233 of the Income Tax Regulations requires that information returns (i.e., T5007 slips) are to be issued to the recipient of social assistance payments described in paragraph 56(1)(u). There are certain exceptions to this but there is no exception for payments that qualify for exclusion from income by virtue of paragraph 81(1)(h).

4. Since the CIHR payments are made to the caregiver and not to the child, the T5007 slips should be issued to the caregiver.

If you have any further questions regarding our memorandum of December 20, 1999, do not hesitate to telephone Mr. Parnanzone of this office.

As regards the answer to your present question concerning the relevance of the reference to family allowances in subparagraph 81(1)(h)(i) of the Act, we are unable to provide one. Since the Family Allowances Act was repealed, such answer would depend on whether, using the wording in the mentioned subparagraph, any similar allowance under a law of a province that provides for payment of an allowance similar to the family allowance provided under that Act (i.e., Family Allowance Act) is being paid. To obtain information concerning such similar allowances, you may wish to contact either the proper Provincial/Territorial authorities or Mr. Bruno Fioravanti of our Legislative Policy Division.

We would note that, while CCRA's guide Your Canada Child Tax Benefit mentions that the National Child Benefit (NCB) is a joint federal, provincial and territorial initiative and that CCRA administers certain provincial and territorial child tax benefit and credit programs, the guide does not clearly indicate that similar allowances to the family allowances under the Family Allowance Act are no longer paid by any of the Provinces and Territories.

We would also note that when the CTB in section 122.6 was added to the Act by S.C. 1994, c. 7, Sched. VII, certain provisions dealing with family allowances (e.g., subsections 56(5), (6) and (7); paragraph 60(q)) were repealed. Accordingly, while it may be possible, we presume that it was not an oversight on the part of the Department of Finance to leave a reference to family allowances in paragraph 81(1)(h) if such reference did not serve any purpose.

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 Canada Customs and Revenue 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 Mrs. Jackie Page at (613)994-2898. A copy will be sent to you for delivery to the client.

Roberta Albert
for Director
Business and Publications Division
Income Tax Rulings Directorate
Policy and Legislation Branch

cc. Bruno Fioravanti

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