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: Whether salaries paid to employees of private agency to provide foster care in their homes are exempt under paragraph 81(1)(h).
Position: Question of fact; however they may be exempt.
Reasons: The fact that foster care payments may be received by an individual as an employee is not determinative in ascertaining whether payments are exempt since the legislation refers to payments received directly or indirectly.
XXXXXXXXXX J. Gibbons, CGA
2000-004728
Attention: XXXXXXXXXX
November 3, 2000
Dear XXXXXXXXXX:
We are replying to your facsimile dated September 14, 2000, concerning the application of paragraph 81(1)(h) of the Income Tax Act to payments made by your organization, XXXXXXXXXX to foster parents hired by them. You indicate that XXXXXXXXXX is a private social service agency for youth and families in XXXXXXXXXX, which provides residential services for children in the care of the Ministry for Children and Families of British Columbia ("MCF").
You state that, pursuant to the Child, Family, and Community Services Act (the "CFCSA") of BC, MCF provides the authority to XXXXXXXXXX to care for the foster children and provides XXXXXXXXXX with funding for the residential care of foster children. From this funding, XXXXXXXXXX hires foster parents to provide care for foster children, which are referred by MCF. In addition to paying their salaries, XXXXXXXXXX provides supervision and support services to foster parents. The foster parents are responsible for providing care to the foster children in their own homes - their primary or principal place of residence. XXXXXXXXXX programs also provides respite or relief care by moving the foster children between the network of foster homes, and, for foster parent vacation periods or other reasons requiring overnight care, the foster child would move to another employee/foster parent's home. The foster parents hired by XXXXXXXXXX must be approved by MCF.
As requested, we have considered the situation outlined in your letter and have provided some comments below. However, we cannot confirm the tax implications of particular transactions unless 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. Thus, our comments are of a general nature only.
In order for payments to a foster parent to be exempt under paragraph 81(1)(h) of the Income Tax Act, the following conditions must met:
1. The payments must be ordinarily made on the basis of a means, needs, or income test.
2. The payments must be made under a program provided for by federal or provincial law.
3. The payments must be received directly or indirectly by an individual (the "individual") for the benefit of another individual (the "cared-for individual").
4. The cared-for individual cannot be the individual's spouse or related to the individual or the individual's spouse.
5. No family allowance under the Family Allowances Act or any similar allowance provided for by provincial law can be payable in respect of the cared-for individual for the period for which the social assistance payment is made.
6. The cared-for individual must live in the individual's principal place of residence; or the individual's principal place of residence must be maintained for use as the cared-for individual's residence during the period for which the payments are made.
In your situation, it would appear that the second condition listed above would be met since the program is provided under provincial law, i.e., the CFCSA. In order to determine if condition 1 is met, reference would have to be made to the CFCSA to determine if it contains a means, needs, or income test. Finally, we note that the Agency has concluded that the fact that foster care payments may be received by an individual as an employee is not determinative in ascertaining whether payments are exempt since the condition in 3 above refers to payments received indirectly as well as directly.
If you require further assistance in determining the income tax status of the specific payments you are making, please contact the Client Assistance Division of your local Tax Services Office.
We trust that these comments will be of assistance.
Yours truly,
John Oulton
for Director
Business and Publications Division
Income Tax Rulings Directorate
All rights reserved. Permission is granted to electronically copy and to print in hard copy for internal use only. No part of this information may be reproduced, modified, transmitted or redistributed in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, or stored in a retrieval system for any purpose other than noted above (including sales), without prior written permission of Canada Revenue Agency, Ottawa, Ontario K1A 0L5
© Her Majesty the Queen in Right of Canada, 2000
Tous droits réservés. Il est permis de copier sous forme électronique ou d'imprimer pour un usage interne seulement. Toutefois, il est interdit de reproduire, de modifier, de transmettre ou de redistributer de l'information, sous quelque forme ou par quelque moyen que ce soit, de facon électronique, méchanique, photocopies ou autre, ou par stockage dans des systèmes d'extraction ou pour tout usage autre que ceux susmentionnés (incluant pour fin commerciale), sans l'autorisation écrite préalable de l'Agence du revenu du Canada, Ottawa, Ontario K1A 0L5.
© Sa Majesté la Reine du Chef du Canada, 2000
Email this Content