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: Tax treatment of allowances under subsections 81(2) and 81(3).
Position: N/A
Reasons: General comments provided.
October 16, 2000
XXXXXXXXXX
Dear XXXXXXXXXX:
Mr. Munir Sheikh, Assistant Deputy Minister, Department of Finance, forwarded to me a copy of your letter of August 25, 2000, and his response of
September 19, 2000, in which he informed you that I would provide my comments regarding your concern about the composition of regional, county, or municipal salaries included on T4 information slips.
In your letter of August 25, 2000, you provided numerical examples which may be actual payments to individuals. The confidentiality provisions of the Income Tax Act (the Act) preclude me from discussing with you the affairs of any other taxpayer without his or her specific written authorization. I am able, however, to offer the following comments in respect of allowances paid to elected municipal officers, certain other public officials, and members of provincial legislative assemblies.
For an elected member of a provincial legislative assembly or an elected municipal officer, subsections 81(2) and (3) of the Act provide an exemption for a nonaccountable allowance received for expenses incidental to the discharge of that person's duties, except to the extent that the allowance exceeds one-half of that person's salary and other remuneration from that office. In order for an amount paid to elected officials to be excluded from income, the amount must clearly meet the criteria set out in one of the above-noted provisions. An individual to which subsection 81(2) or 81(3) of the Act applies may also be reimbursed for expenses related to performing specific duties, such as attending conventions, travelling on business, or mileage. Those reimbursements are not taxable and are not regarded as allowances.
Any allowances which reimburse an individual for expenses considered to be personal in nature would be required to be included in income. Any individual may be required to demonstrate that allowances received are reasonable in relation to the duties performed and the demands of the position.
I appreciate the opportunity to address your concerns.
Yours sincerely,
Bill McCloskey
Assistant Commissioner
Policy and Legislation Branch
David Shugar
957-2134
October 11, 2000
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