12 March 2002 External T.I. 2002-0125315 - ATTENDANT CARE SERVICES EXPENSE

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 a payment made by an employer for the attendant care services of an employee with a disability while on duty in the employer's business qualifies as a deduction in computing the business income of the employer.

Position: Generally, yes

Reasons: The payment seems to be incurred to earn business income, is not capital in nature, is likely reasonable in the circumstances and is not otherwise prohibited by a specific provision of the Income Tax Act.

XXXXXXXXXX 2002-012531
J. E. Grisé
March 12, 2002

Dear XXXXXXXXXX:

Re: Attendant Care Services Expense

This is in reply to the e-mail of February 18, 2002, sent to us by XXXXXXXXXX requesting our interpretation with respect to the deductibility of amounts paid by an employer for the attendant care services in respect of an employee with a disability while on duty in the employer's business.

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 submitted in the manner set out in Information Circular 70-6R4, Advance Income Tax Rulings, dated January 29, 2001. However, in accordance with paragraph 22 of this circular, we will provide the following general comments, which are not binding on the Canada Customs and Revenue Agency ("CCRA") with respect to any specific taxpayer.

Generally, expenses are deductible against business income if they are incurred to earn the business income, not capital in nature, reasonable in the circumstances and not otherwise prohibited by a specific provision in the Income Tax Act (the Act). There is no specific provision of the Act that would prohibit the deduction as a business expense of amounts paid for the attendant care services in respect of a business employee. Since the other requirements would likely be met, the expenses would be deductible as business expenses.

We hope our comments are helpful.

John Oulton, CA
for Director
Business and Partnerships Division
Income Tax Rulings Directorate

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