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 CCRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ADRC.
Principal Issues:
Tax treatment of amounts received to care for seniors with mental and/or physical handicap in taxpayer's home.
Position TAKEN:
Question of fact. General information provided.
Reasons:
Insufficient information provided.
XXXXXXXXXX 2001-010132
T. Young, CA
November 27, 2001
Dear XXXXXXXXXX:
Re: Income Tax Treatment of Amounts Received to Provide Care to Seniors
This is in reply to your letter dated September 13, 2001, requesting our opinion on the income tax treatment of certain amounts to be received by you.
In your letter, you stated that you are in the final stages of closing a contract with the XXXXXXXXXX to provide care and support in your home to seniors with a physical and/or mental handicap. The XXXXXXXXXX will release the funding (except for room and board) for the direct care of three clients with various needs. The XXXXXXXXXX places the clients based on their needs, income eligibility, etc. and payments are made directly to you, the caregiver.
You have stated that you are aware of other people who carry on the same endeavour without the obligation of paying taxes and have asked us to clarify the income tax treatment of the payments from the XXXXXXXXXX to you.
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 ruling request submitted in the manner set out in Information Circular 70-6R4, Advance Income Tax Rulings, dated January 29, 2001. It would also be necessary to review all relevant documentation before a definitive determination of the tax implications could be made. Therefore, we can only provide you with the following general comments.
Paragraph 81(1)(h) of the Income Tax Act excludes certain social assistance payments from the income of a taxpayer, who is an individual, if all of the conditions set out in the paragraph are met. In order for the payments to you, the caregiver, to be exempt under paragraph 81(1)(h), they would have to be payments of social assistance and would have to satisfy the following conditions:
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 caregiver for the benefit of the cared-for individual.
4. The cared-for individual cannot be the caregiver's spouse or related to the caregiver or the caregiver 's spouse or common-law partner.
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 payments are made.
6. The cared-for individual must live in the caregiver 's principal place of residence; or the caregiver '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 require further assistance in determining the income tax treatment of the specific payments you will be receiving and whether paragraph 81(1)(h) would apply, please contact the Client Services Division of the XXXXXXXXXX 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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