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: 1. Whether "honorarium" payments to the elected members of a university's student government are included in income pursuant to paragraph 6(1)(c) of the Act.

2. Whether "honorarium" payments to members of a legislated "board" to oversee enforcement of related legislation is included in income pursuant to paragraph 6(1)(c) of the Act.

Position:    1.   Yes.   2.   Yes.

Reasons: In both situations, the individuals are receiving fees "in respect of, in the course of, or by virtue of an office" within the meaning of "office" in subsection 248(1) of the Act.

2002-016156
XXXXXXXXXX A. Seidel
(613) 957-2058
October 22, 2002

Dear XXXXXXXXXX:

Re: Honorariums

We are writing in response to your letter dated September 4, 2002, concerning the applicability of paragraph 6(1)(c) of the Income Tax Act (the "Act") to "honorarium" payments made to certain individuals.

Background

You have described two different situations in your letter. In the first situation, the student government of a university is paying elected members an "Honorarium". The payment is a fixed amount and is usually paid for each term that the individual remains as a member of the student government. In the second situation, an individual receives a "daily allowance" for services rendered as a member of a board. The board is provincially legislated and exists to oversee the enforcement of applicable legislation.

The particular circumstances in your letter, on which you have asked for our views, appear to be a factual situation involving specific taxpayers. As explained in Information Circular 70-6R5, it is not this Directorate's practice to comment on proposed transactions involving specific taxpayers other than in the form of an advance income tax ruling. Should your situation involve a specific taxpayer and a completed transaction, you should submit all relevant facts and documentation to the appropriate tax services office for their views. However, we are prepared to offer the following general comments which may be of assistance.

Subsection 5(1) of the Act states that "... a taxpayer's income for a taxation year from an office or employment is the salary, wages and other remuneration, including gratuities, received by the taxpayer in the year". The Act does not define the terms "salary", "wages" and "other remuneration" for purposes of section 5 of the Act, such that they must be given their ordinary meaning.

By virtue of paragraph 6(1)(c) of the Act, director's or other fees "received by the taxpayer in the year in respect of, in the course of, or by virtue of an office or employment" are classified as income from an office or employment.

Subsection 248(1) of the Act defines an "office" as being, among other things, "the position of an individual entitling the individual to a fixed or ascertainable stipend or remuneration and includes ... any other office, the incumbent of which is elected by popular vote or is ... appointed in a representative capacity ... and "officer" means a person holding such an office". The definition of "employee" in subsection 248(1) of the Act includes an "officer".

Where an individual is a member of the student government of a university by virtue of the fact that he/she was elected to the position by a popular vote and the student government's constitution provides for a fixed or ascertainable "honorarium" to be paid to a member of the student government, the amount received by the member would be a "director's or other fee" within the meaning thereof in paragraph 6(1)(c) of the Act. The amount received by the member would therefore be included in computing income from an office or employment in the year received the payment is received.

Where an individual is a member of a "board" by virtue of being "appointed in a representative capacity" by a provincial government and the "board's" legislation provides for a fixed and ascertainable "salary" to be paid to the board member, the amount paid to the member of the board could be either "salary" or "director's or other fee", depending on the facts of a particular situation. "Salary" would be included in computing income from an office or employment of the recipient by virtue of subsection 5(1) of the Act. "Director's or other fees" would be included in computing income from an office or employment by virtue of paragraph 6(1)(c) of the Act.

In either situation, if the member of the student government or the "board" declines to accept the "honorarium" payment or the "salary" payment, respectively, no amount would be included in computing income for tax purposes. An amount is only included in income from an office or employment, pursuant to subsection 5(1) or paragraph 6(1)(c) of the Act, when it is "received in the year" by the particular individual.

Yours truly,

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