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 certain payments to an individual from a program funded by the Province of British Columbia's Ministry of Children and Families are taxable.
Position:
Question of fact; insufficient information provided. General comments on the application of paragraph 81(1)(h) of the Act.
Reasons:
Requirements of paragraph 81(1)(h) of the Act must be met.
XXXXXXXXXX 2001-009159
Randy Hewlett, B.Comm.
July 26, 2001
Dear XXXXXXXXXX:
Re: Exemption From Taxation For Caregiver
We are writing in response to your letter dated April 6, 2001, wherein you requested our opinion on whether one of your clients would be exempt from taxation for a specific situation.
In your letter you state that your client is a "L.P.N. who provides assistance with the care" under a program for individuals with disabilities. The program is funded by the Province of British Columbia's Ministry of Children and Families (the Ministry). Currently, there are XXXXXXXXXX adults with disabilities under her care (she may have power of attorney for one of the adults). She supervises the XXXXXXXXXX employees she has on staff who provide the care. The funding provided by the Ministry includes an administration fee and a nominal fee for service per month of approximately $100.
In her view, the funding is exempt from taxation by virtue of section 81 of the Income Tax Act (the Act) because she is not being paid for the service. You ask that we provide a written ruling as to her particular situation.
The situation presented appears to be an actual fact situation involving completed transactions. Written confirmation of the tax implications inherent in particular transactions is given by this Directorate only where the transactions are proposed and are the subject matter of an advance income tax ruling request. Where the particular transactions are completed, the inquiry should be addressed to the relevant Tax Services Office. However, we are prepared to provide the following comments.
Your letter does not contain sufficient information to be able to determine if the funding received by your client is exempt from taxation under paragraph 81(1)(h) of the Act. Below, we outline the conditions your client will have to meet for the payments to be exempt under paragraph 81(1)(h) of the Act.
Paragraph 81(1)(h) of the Act provides an exemption from inclusion in computing the income of a taxpayer in respect of certain social assistance payments received by an individual. A social assistance payment will not be included in the income of an individual for income tax purposes, if all of the following conditions are 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 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.
If you have any further questions on your particular situation, please contact the Client Services Division of your local Tax Services Office.
We trust our comments will be of assistance to you.
Yours truly,
John Oulton, CA
for Director
Business and Partnerships Division
Income Tax Rulings Directorate
Policy and Legislation Branch
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