14 March 2001 External T.I. 2000-0043015 - VOLUNTEER

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.

PRINCIPA ISSUES:

Are the payments made to employees who are volunteer members of an XXXXXXXXXX qualify for the exemption under subsection 81(4)?

Position TAKEN

NO, the exemption does not apply. The amounts are taxable.

REASON FOR POSITION TAKEN:

The employees are not volunteers

XXXXXXXXXX 2000-004301
C. Tremblay, CMA
March 14, 2001

Dear XXXXXXXXXX,

Re: Payments for Volunteer Services

This is in reply to your letter of August 18, 2000, wherein you request a technical interpretation with respect to whether amounts paid to certain employees qualify as payments for voluntary services, within the meaning of proposed subsection 81(4) of the Income Tax Act (the "Act') and consequently for an exemption of up to $1,000.

In your facts you state that the participants on the various XXXXXXXXXX receive an allowance for their membership in the XXXXXXXXXX. The provisions of certain collective agreements govern employees participating on an XXXXXXXXXX.

You have stated and discussed the four conditions that must be met in order for the exemption under proposed subsection 81(4) of the Act to be met.

The four conditions you have described in your letter are as follows:

(1) The person must be employed or otherwise engaged by a government, municipality or public authority ("Employer");

(2) The person must receive an amount for the performance of certain duties as a volunteer;

(3) The person must perform specific duties as either an ambulance technician, firefighter or person who assists in the search and rescue of individuals or in other emergency situations; and

(4) The person cannot have in the same year been employed by the Employer, otherwise than as a volunteer, in connection with the performance of the duties outlined in (3) above or of similar duties.

In your discussion, you have concluded that the employees meet all the requirements described above and you have asked us to confirm your conclusions. You have stated that the nearly XXXXXXXXXX employees involved have asked XXXXXXXXXX to issue them the certificate outlined in proposed paragraph 81(4)(b) of the Act.

Our Comments:

The particular circumstances in your letter on which you have asked for our views appears to be a factual situation involving completed and on-going transactions. As explained in Information Circular 70-6R4, with respect to on-going transactions, this Directorate will only provide advance income tax rulings on proposed transactions involving specific taxpayers. With respect to your situation involving completed transactions, you should submit all relevant facts and documentation to the appropriate taxation services office for their views. However, we are prepared to offer the following comments, which may be of some assistance to you.

In our view, the employees who volunteer for the XXXXXXXXXX and are paid an allowance under their particular collective agreement do not meet the required conditions of proposed subsection 81(4) of the Act.

The Dictionary of Canadian Law defines a volunteer as follows: " A person who voluntarily acts for a nominal consideration or honorarium". Although it is a question of fact whether an individual is a volunteer, generally, the Canada Customs and Revenue Agency does not expect an individual to be remunerated at market rates when fulfilling the functions of a volunteer.

In the Memorandum of Agreement between XXXXXXXXXX, it is stated that as part of their normal duties, all employees may be required at times to take action in response to emergencies. Generally, in our view, an individual who is under a contract of employment and does different tasks at the request of his employer as well as participates in an XXXXXXXXXX all while being remunerated under a collective agreement at current market rates is not considered to be doing the functions of a volunteer.

Specifically, in your submission you state that the employee will receive his or her regular earnings while attending training on an XXXXXXXXXX and that the provisions of a collective agreement govern employees participating on an XXXXXXXXXX. If there is not enough volunteers, the employer reserves the right to appoint members and the employees receive their regular earnings while attending the training. In the event of an actual emergency, members of the XXXXXXXXXX receive their regular earnings. Overtime may also apply, depending on the total hours worked. Accordingly, it is our view, that an employee being paid his regular wages while on an XXXXXXXXXX would be paid otherwise than as a volunteer and accordingly, an XXXXXXXXXX member is not a volunteer as contemplated by proposed subsection 81(4) of the Act.

Since, in our opinion, the employees who volunteer for the XXXXXXXXXX do not meet the requirements of condition #2 as described above, and you are looking for a written response on an urgent basis, we have not commented on Conditions #1, #3, & #4.

We trust our comments are of assistance.

Yours truly,

Jim Wilson
for Director
Business and Partnerships Division
Income Tax Rulings Directorate
Policy and Legislation Branch